10 May 2022

Ashurst and Travers Smith lead as Morrisons wins bidding war to rescue McColl's

Acquisition takes McColl's out of administration and saves 16,000 UK jobs and 1,160 stores nationwide

The front of a McColl's newsagent on a British high street

Ashurst and Travers Smith are advising on UK supermarket giant Morrisons’ acquisition of convenience store franchise McColl’s after it was put into administration this week. 

The deal, by way of a pre-pack administration, will see Morrisons acquire all 1,160 of McColl’s stores and take on all of the company’s 16,000 employees as well as its two defined pension schemes.

In securing the rescue deal, the Bradford-based grocery chain won out over petrol retailer EG Group, owned by the billionaire Issa brothers who were behind the group’s acquisition of fellow Yorkshire-based supermarket chain Asda for £6.8bn in early 2021. 

McColl’s formally suspended trading on Friday and appointed PwC as administrators earlier this week with legal counsel provided by a team from Hogan Lovells. Morrisons and EG vied for the company over the weekend before Morrisons’ offer was accepted.

Both Travers, which is advising McColl’s, and Ashurst, which is advising Morrisons, have histories advising the retailers. Travers has advised McColl’s since 2005 and worked on several key matters for the company, including its previous work with Morrisons. In 2017, Travers assisted McColl’s as it entered a long-term supply chain partnership with Morrisons. 

The company later agreed to rebrand 270 of its stores as Morrisons Daily convenience shops, a model that will likely be expanded upon following the acquisition. 

Ashurst, meanwhile, brought Morrisons through its £7.3bn takeover by Clayton Dubilier & Rice which went live in October. 

Travers’ team this time around is being steered by corporate M&A leader Andrew Gillen and restructuring and insolvency head Edward Smith. Senior restructuring associate Kirsty Emery and corporate associate Fabian McNeilly are also supporting work on the transaction. 

Ashurst’s team is being led by relationship partner Tom Mercer and restructuring and special situations partners Olga Galazoula and Giles Boothman, who heads up the firm’s global restructuring and special situations group. The trio are being assisted by restructuring and insolvency counsel Inga West and restructuring associates Adi Jain and Rachel Tan as well as corporate associates Jake Hadfield and Sara Hamzawi. 

David Potts, Morrisons chief executive, 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.”

Potts added that the deal would allow it to build upon the “proven strength” of the Morrisons Daily retail format with the full network of McColl’s stores.

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