TESCO, the British supermarket giant, has promised heavy investment to develop the Quinnsworth chain. It has also assured the group's suppliers that it is committed to buying in Ireland.
Tesco's £630 million sterling buy-out of the Associated British Foods retail interests in Ireland was completed yesterday morning. It is the biggest takeover of an Irish-based company.
Quinnsworth management said it would ensure much greater resources for expansion. The deal was concluded despite a last-minute expression of interest by the Superquinn boss, Mr Feargal Quinn, but is still subject to EU Commission approval.
Tesco, which is the leading supermarket operator in Britain reassured Quinnsworth staff. Existing management would remain in place and it had bought the business "to grow it, not to shrink it," it declared.
The company pledged to invest £100 million over three years in revamping existing sites and building new stores.
Business lobby groups and opposition politicians expressed concern about the effect on Irish suppliers. The Minister for Enterprise and Employment, Mr Bruton, has sought a meeting with Tesco.
But Tesco's chief executive, Mr Terry Leahy, said the group already bought £500 million worth of supplies in Ireland and was committed to working with Quinnsworth's existing suppliers.
Distributors and suppliers doing business with Quinnsworth - which industry sources believe is worth some £750 million a year - had "nothing to fear" regarding possible loss of contracts, he said.
Tesco played down suggestions of a price war. But its entry is bound to accelerate the development of the sector and introduce a whole new range of own-brand products.
The deal, which is Tesco's biggest, will give the UK retailer 20 per cent of the grocery market in the Republic. It is buying 75 Quinnsworth and Crazy Prices stores in the Republic, with an annual turnover of £900 million.
It is also buying 34 stores in Northern Ireland, trading as Stewarts, Crazy Prices, Superdeal, Westside Stores and Bloomfields. Turnover is £400 million a year and gives Tesco immediate access to 17.5 per cent of the market. It greatly boosts the company's presence in the North, where it has only one store to date.
Tesco will also get Wine Barrel, a chain of 79 off-licences, and Lifestyle Sports and Leisure, with 47 sports goods shops.
But the Primark chain, including Penneys, which is also owned, by ABF is not included and is not for sale.
Mr Don Tidey, Quinnsworth chairman, said yesterday that the deal represented the best way of securing Quinnsworth's future. "Retailing is rationalising at a rapid pace," he said. "There was a certain inevitability about this."
Mr Tidey said the company had been fortunate to be acquired by Tesco, which he said "measures up to the best in the world in retailing terms and brings resources far greater than we could ever have brought."
Mr Leahy said no decision had yet been taken on whether the Quinnsworth brand name will be changed, or on the introduction of Tesco brands. He said the combined population North and South of over five million was an attractive market, with a £6 billion food retailing sector and strong economic growth.
He said the company wanted to enlarge the market and would do this through expanding existing stores and building new ones. Tesco believes it can improve profit margins from the present 4.7 per cent to around 6 per cent over the next three years.
Tesco's turnover last year was £13 billion sterling, with profits of £675 million.