Supermarket chain Morrisons has agreed to sell its loss-making chain of convenience stores for about £25 million in cash.
The Bradford-based grocer said a team led by retail entrepreneur Mike Greene and backed by Greybull Capital is buying 140 M Local branches as it focuses on its core supermarkets business.
Morrisons will retain five M local stores, which are either on forecourts or will be converted to small supermarkets.
Greene said the 140 branches, which employ about 2,300 people, will be rebranded as My Local as there would be no redundancies among store staff following the change of ownership.
He also said up to 200 jobs would be created as management re-opens ten stores that are currently closed, including one in Edinburgh.
Greene said: “We are committed to the people who already work in the stores and we want to grow the business with them.
“We believe that their potential, combined with the expertise of our leadership team, will give us a distinct advantage in the sector.”
Morrisons expects to incur a loss of about £30m on the sale. It also retains a guarantee on individual lease obligations, which could revert to Morrisons if the new business does not succeed. This residual contingent liability is estimated at up to £20m.
The M Local stores racked up an operating loss of £36m last year, and were forecast to lose £23m this year.
Chief executive David Potts said: “Convenience is a large and growing channel in UK food retailing. Morrisons learnt much from its entry into the market, but M local was unable to scale.
“However, we remain open to other opportunities in convenience in the future. I would like to thank all the Morrisons colleagues for their hard work and dedication to M local.”
Today’s sale comes after Morrisons launched a review of the convenience store business in March and concluded that M local would have needed “significant” additional investment in new sites and capital expenditure to reach profitability.