Somerfield stalks Texaco shops

FOOD retailer Somerfield is in talks to buy the 140-strong chain of forecourt convenience shops owned by US oil giant Texaco.

The news comes just a week after Britain's fifth-largest food retailer found itself on the receiving end of a £1bn-plus bid from Icelandic retailer Baugur. Somerfield, which also owns the Kwik Save chain, is still 'investigating' the indicative 190p-a-share Baugur offer.

The board is expected to decide later this week whether to allow the Icelanders to begin due diligence but there is some reluctance as Baugur has just taken over rival Big Food Group, owner of the Iceland frozen foods chain.

Somerfield has been in talks with Texaco for some months and, if the deal goes ahead, it plans to sell and lease back the shops to a property firm.

No price was given but it is expected to be less than £100m, which will be largely offset by the sale and leaseback of the chain. The acquisition would lift Somerfield's forecourt convenience stores chain above 170.

Texaco said the proposed disposal is in line with its strategy of concentrating resources on refining and distribution, but that it would continue to supply fuel to the forecourts. It supplies fuel to more than 1000 Texaco-branded third-party service stations.