Haldanes and Co-op engage in legal battle over shop sale

A war of words and legal actions has broken out between the Co-operative Group and Haldanes. The fledgling supermarket chain has accused the UK's fifth biggest food retailer of wanting to drive it "out of business" after Haldanes bought more than 20 former Somerfield stores from the Co-op in early 2010.

Haldanes said it had "issued proceedings in the High Court" against the Co-operative Group over allegations that it "materially breached key terms of the agreement" over the sale of the 26 shops. It said that if had been aware of just how dire the trading performance of these shops was, it would not have proceeded with the acquisition.

However, the Co-op, which owns 3,000 stores, denied the allegations and said it had started its own legal proceeding against Haldanes in April.

It says it wants to "recover possession" of a number of the former Somerfield stores after Haldanes failed to pay rents owed to the Co-op.

The Co-operative Group, which was forced to divest a number of stores after completing its £1.57bn acquisition of Somerfield in 2009, said it had not yet received legal papers from Haldanes but that, if they did arrive, it would "contest them vigorously".

Haldanes hit back, saying the Co-op's legal proceedings related only to specific disputes at two stores.

Arthur Harris, the chief executive of the group behind 24 Haldanes shops and 20 Ugo food stores (including two converted Somerfield outlets), said: "The Co-op has made me their 'whipping boy' for stores which they were struggling to find a buyer for, but which they needed to sell, to avoid competition issues."

He added: "We believe the Co-op would much prefer to see Haldanes go bust than address the issues arising, as we calculate this could represent as much as £10m bottom-line annual profit for the Co-op."

The Co-op said it "has acted in good faith throughout its dealings with Haldanes and categorically refutes all allegations of impropriety. The original transaction was subject to full due diligence on the part of Haldanes and its advisers".