Morrisons has confirmed a deal to rescue McColl's and save all 16,000 jobs after the convenience chain officially entered administration and appointed PwC.
The supermarket giant beat a rival bid from the billionaire owners of Asda after the convenience store chain signalled its intension to file for administration on Friday, in a move which plunged the future of its 1,100 shops into doubt.
Final bids were submitted ahead of the 6pm deadline on Sunday by EG Group, the retail giant owned by the Issa brothers and TDR Capital, and Morrisons.
EG Group's offer included keeping 6,000 jobs and all of McColl's stores open.
It was reported yesterday that EG had bowed to pressure to look after McColl's pension liabilities, in a move that would have meant that its 2,000 members would avoid a cut of up to 20% to their promised pensions over their lifetimes.
Trustees for the McColl's pension schemes had also called on the Business Secretary Kwasi Kwarteng to do whatever he can to ensure pension scheme members are protected.
The successful deal from Morrisons comes after early approaches had reportedly been rejected by lenders, which preferred EG's offer to instantly repay more than £160m in debts from McColl's.
Morrisons chief executive David Potts said: "Although we are disappointed that the business was put into administration, we believe this is a good outcome for McColl’s and all its stakeholders.
"This transaction offers stability and continuity for the McColl’s business and, in particular, a better outcome for its colleagues and pensioners.
"We all look forward to welcoming many new colleagues into the Morrisons business and to building on the proven strength of the Morrisons Daily format."
The two businesses are already partners, with McColl’s operating hundreds of convenience shops under the Morrisons Daily brand - and was expected to terminate its deal with the convenience chain if its takeover move proved unsuccessful.
McColl's has struggled financially in recent years after witnessing soaring costs due to supply chain disruption, inflation and its large debt burden.
On Thursday evening, McColl's had said it was in talks over "potential financing solutions" to resolve its funding issues.
Shares in McColl's were suspended earlier this week after the company delayed the publication of its latest financial results due to its financing talks.
The deal comes less than a year after Morrisons itself was bought for £7bn by US private equity company Clayton, Dubilier & Rice.
A EG Group spokesperson said: "EG Group notes today’s announcement by PwC in relation to McColl’s Retail Group, following a pre-pack administration process.
"EG confirms that it was interested in rescuing the McColl’s business - our proposal would have safeguarded the UK jobs of 16,000 McColl’s colleagues, increased the pay of all hourly-paid colleagues aged 18 and over to £10.05, maintained all the currently trading stores, and ensured continued provision of invaluable community services, such as Post Office counters.
"Moreover, EG Group had proposed to maintain the link between McColl’s pensions schemes and the business, respecting historical promises made to the members of the schemes.
"EG also hopes the announcement will bring to an end the uncertainty for the hard-working colleagues at McColl’s and wishes them the best for the future."
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