The Co-operative Group has agreed to sell its 129-strong petrol forecourt chain to supermarket giant Asda in a deal worth around £600 million.

The sale will see 5% of Co-op’s entire retail estate – including 129 petrol stations and three development sites – handed over to Asda, which already runs 323 petrol stations across the UK.

Co-op, known for its supermarket chains and funeral care operations, said that offloading its petrol forecourts will allow it to focus on its convenience business as well as raising important cash for the business.

For Asda, the move is part of its plans to become “the UK’s second largest supermarket” and to move further into the country’s convenience store market.

Asda will pay £438 million in cash and take on around £162 million of lease liabilities as part of the deal, with the final amount set to be confirmed on completion later this year.

The cash will go towards funding new convenience stores in the heart of more communities, and reducing its net debt, the Co-op said.

Around 2,300 Co-op staff who work across the sites being sold will transfer over to Asda once the deal is complete. The Co-op has a total workforce of about 63,000 people.

The deal comes after the Co-op announced last month it would cut around 400 head office jobs in the face of tough trading conditions worsened by rising inflation.

And in April, the firm revealed that its annual profits were slashed in half following supply chain disruption and higher costs.

Shirine Khoury-Haq, Co-op’s newly-appointed chief executive, said: “This transaction is in line with our strategy to move away from operating petrol forecourts and supports our vision of co-operating for a fairer world while building our core leading convenience business.”

Mohsin Issa, the co-owner of Asda, said: “We have always been clear in our ambition to grow Asda and are hugely excited to create this new and distinct part of our business, giving us the opportunity to bring Asda value in fuel and groceries to even more customers and communities across the UK.

“We see convenience as a significant growth opportunity for the business.

“This acquisition accelerates our strategy in this area and forms part of our long-term ambition to become the UK’s second-largest supermarket.

The sale is due to complete in the final three months of 2022.