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BREAKING: Morrisons outbids Asda owners to buy McColls

It's emerged that convenience store chain McColl's is now likely to be acquired in a pre-pack deal by the original front-runner, Morrisons, after Asda's owners, the Issa brothers failed to clinch a deal.

Morrisons returned with an improved deal that would see the lenders repaid in full immediately, satisfying one of their key demands.

The pre-pack administration wil mean Morrisons will buy McColl's immediately after it enters insolvency proceedings overseen by PricewaterhouseCoopers (PwC).

Morrisons’ offer is thought to include a pledge of paying the lowest-paid staff £10 an hour.

Morrisons is McColl's key wholesale supplier. It has also formed a tie-up with the chain to convert hundreds of McColl's shops to Morrisons Daily convenience stores. There are already more than 200 operating, and these have been performing well.

McColl's currently has approximately 1,100 convenience stores and 16,000 employees.

Morrisons, which was acquired by US private equity firm Clayton, Dubilier & Rice last year, has 18 manufacturing sites and 495 stores, with around 110,000 staff members.