Convenience boost for Tesco - Food Retailing - Tesco PLC acquires One Stop, Day and Nite convenience stores from T. and S. Stores PLC - Brief Article

Eurofood, Nov 7, 2002

Tesco has moved to strengthen its position in the convenience sector, announcing a deal with T&S Stores which gives its both the One Stop, and Day & Nite convenience formats. The UK's leading food retailer said the acquisition will boost its market share in the growing convenience sector by about 5%.

The all-share deal will see current issued shares and soon to be issued shares valuing T&S Stores at 377.3m [pounds sterling] (597.6m [euro]), a premium of 26.7% over T&S Stores' latest closing price, and of around 36.3% over its average closing price for the last 90 days.

Tesco's deal with the West Midlands-based T&S Stores, which also operates Dillons newsagents, follows the Coop's 131m [pounds sterling] acquisition of Alldays. Tesco's purchase will add a total of 862 convenience stores to its Tesco Express network.

Last year T&S Stores generated revenues of 933m [pounds sterling] and operating profits of 46m [pounds sterling]. Some 24% of sales and 12% of operating profit came from the Dillons newsagents and the Supercigs formats, which Tesco plans to divest.

The big supermarket players originally got into convenience retailing by hooking up with petrol stations, offering a small range of products on the petrol forecourts.

The formats have also performed well in town centres, and all the major supermarkets are looking to a piece of the action.

Tesco said the geographical fit between T&S Stores' operations and its Tesco Express format is good, and chief executive Sir Terry Leahy said, "The conversion of many of T&S's stores to the Tesco Express format, will create jobs and will strengthen our presence in many neighbourhoods across the country."