Tesco to take over Mill convenience stores

Dec 17 2010 by Peter McCusker, The Journal

A CHAIN of convenience stores based in the North East has been sold to supermarket giants Tesco in a deal believed to be worth in excess of £20m.

Nigel Mills, who owns the Whitley Bay-based Mills Group, has sold its 77 convenience stores and is now planning to concentrate on building up the company’s six-strong supermarket portfolio.

Mr Mills set up the business with his father John almost 25 years ago but says he believes Tesco, under its One Stop arm, will be able to provide the levels of investment the stores need.

All of the Mills convenience stores, almost half of which are in the North East and Cumbria, will now be branded as One Stop stores.

Tesco One Stop chief executive David Turner said: “This is exciting news for One Stop. Acquiring 77 Mills stores means we can introduce One Stop’s quality, range and value to the communities they serve.

“We’ll be investing in refurbishing the stores, creating an even better shopping experience, as well as bringing down prices. I am also delighted to welcome the staff in these stores to the One Stop team.”

The deal will see over 750 Mills staff transfer to One Stop, including the 35 staff based at the existing Mills Group head office in Whitley Bay.

Nigel Mills said his company would be looking for new premises in Whitley Bay as the new base for the remaining supermarket operations. It also owns the Trout Hotel in Cockermouth.

He said he had been approached by Tesco in late summer. “We are pleased to have agreed this deal. These stores and their staff will be in great hands with One Stop. They’re joining a brilliant team and will be very well looked after. I want to thank them for all their work and wish them the very best for the future.

“The industry is changing. It requires a lot more investment to maintain your existing position. It is becoming harder and harder to find the funds to take a business to the next level.

“We started off as a business with a turnover of £2m a year and finished as a company with sales of £2m a week.”

Mills has supermarkets in Hetton-le-Hole, one in Durham City, as well as Warwickshire, two in Yorkshire and one in Mansfield, Nottinghamshire, which all trade under the Nisa banner.

Rod Wilkinson, head of corporate finance at KPMG in Newcastle, which acted for the Mills Group, said: “We are delighted to have advised the Mills Group on this transaction. It was a complicated deal as there are a large number of separate legal entities in the Mills Group.”

One Stop has been wholly-owned by Tesco since 2003 but is run as a separate business from its head office in Walsall and this deal brings the total number of its stores to 598 across England and Wales.

The deal is conditional upon regulatory approval and this is expected to be completed in the spring.

As well as shops in the North East and Cumbria, Mills convenience stores are found in Wales, Lincolnshire, Nottingham and there are over a dozen in Birmingham.

The Association of Convenience Stores has called on the Office of Fair Trading to intervene in the acquisition.

ACS chief executive James Lowman said: “The competition authorities have repeatedly failed to grasp the implications of the continuing growth of Tesco’s shadow brand.

“We need a full and robust investigation into the implications of the continued growth of the One Stop format.”