23 April 2008
Co-op looking to acquire Somerfield
Somerfield on the shopping list again.
The Co-operative Group (Co-op), the UK's fifth largest supermarket chain and world’s largest co-operative society, is currently involved in talks to buy competitor, Somerfield. Although talks are still in the early stages, the Co-op believes Somerfield would be a "strong fit" for a merger.
Last month, Somerfield’s planned £2 billion sale was dropped because only one bid, believed to be the Co-op had been tabled by the March 14 deadline.
At that time, Asda had still to make an offer, despite being thought to have triggered the acquisition process by sounding out Somerfield in 2007.
Co-op expansion
The Co-op has already expanded by merging with fellow mutual United Co-operatives in July 2007. At that time, Peter Marks was the CEO of United Co-operatives – later to become CEO of the merged Co-op. He'd reportedly been considering a bid for Somerfield some 3 years previously while he was still CEO of United Co-operatives.
The Co-operative Group now has the critical mass necessary to deliver real change.
The Co-op plans to spend £1.5bn on business renovation following a 46% profit drop in 2007. The Co-op blamed this decline on several factors including post-merger integration costs. Now the company plans to double its profits over the next 3 years.
Bristol-based Somerfield has 900 stores and controls less than 4% of the grocery market. But with more than 4,300 retail outlets across the UK, and employing 85,000 people, Co-op's CEO Marks says, "The Co-operative Group now has the critical mass necessary to deliver real change."
Staff "in the dark"
Last month, Times Online carried responses from Somerfield’s staff to the news of the company’s potential sale.
“A change of ownership would be welcomed by a majority of staff, however the lack of information regarding the sale is destroying morale,” says Terry from Torquay, referring to headquarters as “puzzle palace”. “We still haven’t been told officially that we're being sold.”
Co-op returns home
The mutually owned Co-op, run on behalf of its 2.5 million members, has recently opened a new headquarters in Rochdale – 164 years after the birth of the co-operative movement. The Rochdale Equitable Pioneers Society was founded in 1844, when 28 workers joined forces to open a grocery shop. The Co-op is now part-owned by Robert Tchenguiz, the property tycoon.
A change of ownership would be welcomed by a majority of staff, however the lack of information regarding the sale is destroying morale.
Have your say
“We haven’t officially been told,” is still a constant complaint of staff in companies in the run-up to a potential sale. Is this because senior leaders are so busy looking outside that they forget their own people?
Or perhaps they think staff won’t be worried – or worse still, don’t matter? Maybe it’s OK to pick up news about your employer from the external media?
It’s interesting that such a crucial piece of information is missing from official company communication channels.
Maybe it’s just that senior leaders don’t know what to say, or fear laying out the usual “don’t worry” platitudes. What do you think company leaders should be telling their staff during these uncertain times?
Discuss these issues with other comms practitioners by joining the Internal Comms Hub members' group on the Communicators' Network.
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