Co-op boss Peter Marks says the deal will provide "rocket fuel" for the firm The Co-operative Group (Co-op), the UK's fifth largest supermarket chain, has agreed to buy rival Somerfield. The Co-op said the £1.57bn ($3.1bn) purchase would strengthen its position in the UK retail market. Manchester-based Co-op, a mutual group run on behalf of its 2.5 million members, also said the deal was done on a cash-free and debt-free basis. With more than 4,300 UK retail outlets, it employs 85,000 people. Bristol-based Somerfield has about 900 stores. The latest figures from research firm TNS, show that in the 12 weeks to the middle of June, the Co-op had 4.4% of the UK grocery market, and Somerfield 3.7%. Stores sell-off? Somerfield is owned by a consortium that includes private equity firm Apex, Barclays Capital and property magnate Robert Tchenguiz. SUPERMARKET SHARE Tesco: 31.2% Asda: 16.8% Sainsbury's: 15.9% Morrisons: 11.4% Total Co-ops: 4.2% Waitrose: 3.9% Somerfield: 3.7% Aldi: 2.9% Lidl: 2.3% Iceland: 1.7% Netto: 0.6% Farm Foods: 0.5% Source: TNS They bought the chain for about £1.1bn three years ago. Somerfield was put up for sale in January and the Co-op first expressed an interest in a possible purchase in April. The Co-op may now be told by competition watchdogs to sell some of the stores it has purchased, with Morrisons, Waitrose and Iceland touted as potentially interested parties. Co-op chief executive Peter Marks says Somerfield's acquisition will provide "rocket fuel" for his group's growth plans. Profits target Mr Marks said the deal, which is subject to regulatory approval, would "create a stronger fifth player in food and a convenience store chain with unrivalled geographic reach". SOMERFIELD FACTS Founded as JH Mills in 1875 Renamed Gateway in 1950 Renamed Somerfield in 1994 Floated on stock market in 1996 In April, the Co-op said it would spend £1.5bn to revamp its business and lift its fortunes, after 2007 profits fell 46% to £195.5m. The firm also said then that it aimed to double its profits over the next three years. It expanded in July 2007 when it merged with fellow mutual United Co-operatives. 'Big four' Neil Saunders, consulting director at Verdict Research, told the BBC: "The benefits for the Co-op of this move are that they have a larger scale, and it propels them into a different league in terms of food retailing. "Unless you have scale in the market, it is hard to compete with the big four grocers. "Now it can compete more effectively, but it has to be said that the big four will still remain some bit ahead. "For consumers, it probably means a slightly better standard of store. The Co-op has traditionally been better at that than Somerfield, although Somerfield has put a lot of effort into their stores recently."
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The Co-operative Group (Co-op) and Bristol-based Somerfield today agreed on a deal worth £1.565 billion which results in Somerfield being acquired by Co-op. Co-op has said that the acquisition took place on a "cash-free debt-free basis."
A high street store run by Somerfield. 
Peter Marks, chief executive of The Co-operative Group, claimed that "this is good news for consumers and for competition in the grocery market, where we will create a stronger fifth player in food and a convenience store chain with unrivalled geographic reach." He then said that "for The Co-operative Group this is a transformational deal – cementing our position as the UK’s premier community retailer and helping us significantly as we lead a renaissance of The Co-operative brand. "

Paul Mason, chair of privately-held Somerfield, also commented on the takeover. "The Co-operative Group and Somerfield have a similar focus in terms of customers, store types, product ranges and business vision. Our shared vision of providing a high-quality and affordable convenience offer to local communities means that together we will be twice as strong, and therefore twice as able to deliver the local grocery shops British customers demand," he said.

With 4.4% share of the market, the Co-op is the fifth largest grocery chain in the UK. Somerfield is the seventh largest with a 3.7% share. The owners of Somerfield made their wish to sell the company clear in January of this year. Co-op first expressed an interest in the purchase in April.

BBC News Online reported that the Competition Commission may force Co-op to sell some stores due to its increased presence.