The struggling convenience store retailer Alldays has been bought by the Co-operative Group from receivers for �131m ($203m).

The move will make the Co-op the UK's largest operator of convenience stores.

Convenience store

Combines groceries, newspapers and an off-licence typically 1,000 to 2,000 square feet

Alldays operates 637 stores with 10,500 staff in the UK, while the Co-op has 1,100 stores of which about half are in its convenience store format.

Alldays, which is based in Eastleigh, Hampshire, had been seeking for a buyer for several months after the firm became crippled with debt.

Analysts said the deal could be a good move by the Co-op, which has its headquarters in Manchester..

"Alldays has got itself in a huge mess and this is as good a resolution as any," said Richard Perks, a retail analyst at Mintel Retail Intelligence.

"It makes sense for the Co-op as they have failed with larger stores and have been slowly getting out of them," he added.

The combined group will have annual sales of more than �5.5bn a year.

Debts

Earlier on Monday, Alldays had suspended trading in its shares on the stock market pending clarification of its financial position.

It was then announced the retailer had been put into receivership, and subsequently bought by the Co-operative Group.

Alldays had run-up debts of nearly �195m in a failed attempt to split the business into franchises.

The company was forced to borrow �200m in order to buy the stores back.

Alldays' shareholders will receive five pence a share, or a total of �2.2m, following the takeover.

The rest of the �131m being paid by the Co-op will be used to settle a large proportion of Alldays' debts.

Banks have agreed to write off a substantial amount they were owed to allow the deal to be finalised.

"This is a great deal for the creditors of the group and the employees alike," said David Hargrave of PricewaterhouseCoopers who were appointed receivers prior to the sale.

Rivals

The convenience store market has seen dramatic changes in recent years, with supermarket giants like Tesco and Sainsbury's opening a string of smaller neighbourhood stores.

Co-op's biggest rival, though, is the One Stop chain of 900 convenience stores, owned by T&S Stores.

Convenience stores usually combine groceries with newspapers, magazines and an off-licence, and have between 1,000 square feet and 2,000 sq ft floor space (95 to 185 square metres).

No job losses

The Co-operative Group was formed by the merger of the Co-operative Wholesale Society (CWS) and Co-operative Retail Society (CRS) two years ago.

The Co-op has said it will retain all of Alldays' 10,500 employees, and will run the firm as a separate brand before merging it into its own operations.

"This deal establishes the Co-operative Group as the UK's leading convenience store operator," said the Co-op's chief executive Martin Beaumont.

"The acquisition of Alldays will help us to build the momentum behind our highly successful convenience proposition."