Co-op Group swoops with deal to take over struggling Southern Co-op

The Co-op Group is to take over the struggling Southern Co-op network in a deal which will add about 300 grocery and funeralcare outlets and 4,500 staff to one of Britain’s biggest retail operations.

MEZIESBLOG can exclusively reveal that the Co-op Group, which is based in Manchester, has agreed the outline terms of a deal that will see it taking on the Southern Co-op, which was established in Portsmouth in 1873.

The process, which is technically known as a transfer of engagement, is expected to be confirmed publicly as early as Thursday morning.

One source said the Co-op Group, which has listed debt, was likely to issue a statement to the London Stock Exchange to confirm the proposal in response to Sky News’s report.

The takeover of the Southern Co-op will require the approval of a two-thirds majority of the Southern Co-op’s roughly 300,000 members, with a vote likely to take place in the coming months.

Talks between the Co-op Group and the Southern Co-op’s board are understood to have been underway for some time.

They already have a close relationship, because the Group undertakes buying and other services for independent co-ops across the country.

Last year, the Southern Co-op announced that it would sell more than 20 of its food stores “following a period of sustained market change and operating cost increases across the retail sector”.

Strategically, the takeover by the Co-op Group is understood to have become an attractive option, because of the Southern Co-op’s ownership of a number of crematoria.

Although the Co-op Group continues to invest heavily in its funeral services operation, it sold its remaining crematoria to rival Dignity years ago, and has been looking for a way to regain a presence in that market amid the growing number of Britons choosing to be cremated without expensive funeral services.

The Co-op Group itself came close to collapse in 2013, when it recorded losses of £2.5bn in the wake of a disastrous expansion in the retail banking market.

It was forced to sell its interest in the Co-op Bank, exit underperforming businesses and replace its management team and governance structure in a bid to survive.

The business was subsequently turned around under the stewardship of Allan Leighton, the retail veteran who now chairs Asda.

In recent weeks, however, it has announced the departure of Shirine Khoury-Haq as chief executive after a year in which the Co-op Group suffered a £126m underlying pre-tax loss after a massive cyberattack.

The Co-op Group’s chair, Debbie White, has appointed an interim CEO while it searches for a permanent successor.

“2025 was a challenging year, but those challenges have helped us reshape Co-op for the future,” Ms White said last month.

“Despite a cyberattack and tough market conditions, our colleagues have shown incredible resilience, keeping communities served and essential services running.

“To get back on track, we have adjusted our commercial strategy and strengthened our partner offer while substantially growing active membership.

“Now, we’re looking ahead with a strong focus on customers, while continuing to prioritise the people who own our business, targeting 10 million active members by 2030.”

Both the Co-op Group and Southern Co-op declined to comment.