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LONDON -- Tesco, Britain’s No. 1 supermarket group and biggest retailer, is buying up to 30 petrol stations and related shops from rival Wm Morrison Supermarkets to boost its presence in the fast-growing convenience store market, Reuters reported.
The petrol stations and convenience stores were formerly part of a joint venture between supermarket group, Safeway, and oil giant, BP. Morrison bought Safeway in 2004. BP had right of first refusal on 12 of the sites and stores, Tesco said.
Following the deal, which is subject to approval by the Office of Fair Trading, Tesco will possess around 6 percent of the United Kingdom's 24-billion-pound convenience market measured by sales, according to the Reuters report.
"This is a small deal that will allow Tesco to convert freehold sites in good locations, with new and conforming forecourts and shops, to its Express convenience format," the company said in a statement.
Neither Morrison nor Tesco disclosed the value of the deal, although Morrison said the 30 sites had a gross asset value of 55.3 million pounds on January 30.
Supermarkets are boosting their presence in the fragmented convenience store market as planning restrictions limit their expansion of larger shops.
With Tesco now snapping up convenience store chains, Wal-Mart, which owns Britain’s No. 2 supermarket group Asda, is also looking at smaller formats, reported Progressive Grocer, a sister publication to Convenience Store News.
Wal-Mart CEO Lee Scott has complained of Asda's inability to secure new big spaces for the chain's stores. Wal-Mart and Asda are now looking at developing new formats -- including small convenience stores -- for the British market, according to reports.
Wal-Mart does have strong convenience store experience in its past from which to draw upon. From 1990 to 2003, it owned McLane Cos., the largest convenience store distributor in the U.S.; and its partnerships with petroleum giants Murphy Oil USA and Tesoro educated the company in fuel marketing.