Co-op Group keen to buy rival Somerfield

The Co-operative Group is "confident" of buying rival grocer Somerfield as it embarks on a £1.5 billion expansion programme, chief executive Peter Marks said.

Mr Marks said discussions are at an early stage but there would be a "strong fit" between the companies.

The Co-operative Group is the UK's largest mutual retailer with 2.5 million members. The group said it wanted to double its profit in three years.

Profit this year was 46 per cent lower than the previous year, at £195.5 million, however.

The company blamed a number of one-off charges – the costs of integration following its merger – along with the impact of severe weather on general insurance, fluctuations in property values and investment write downs through the bank's exposure to subprime investments.

The Co-operative Group and United Co-operatives merged last year.

Mr Marks said: "The Co-operative Group now has the critical mass necessary to deliver real change. With the successful integration behind us, we can embark on our ambitious three-year plan to invest £1.5 billion to transform our retail estate under a single unified brand and build market share."

The Co-op plans to refit the remaining 700 of its 2,200 supermarkets and convenience stores across the UK over three years.

As part of the programme, all the food stores, funeral parlours and travel shops will operate under the same brand name by 2009, Mr Marks said.