LONDON (AFP) - The Co-operative Group said on Wednesday it had agreed to buy rival supermarket chain Somerfield for 1.565 billion pounds, which will make it Britain's fifth-biggest food retailer.

"The Co-operative Group and Somerfield today announce that they have entered into an agreement for The Co-operative Group to acquire Somerfield," the pair said in a joint statement.

The deal will give the enlarged Co-op group more than 3,000 grocery stores and a market share of about eight percent.

Somerfield is the seventh-biggest supermarket chain in Britain after Tesco, Wal-Mart owned Asda, Sainsbury's, Morrisons, the Co-op and Waitrose.

Completion of the deal, which is subject to regulatory approval, was expected within a few months, after which the Somerfield name will disappear from the high street.

"This is good news for consumers and for competition in the grocery market where we will create a stronger fifth player in food and a convenience store chain with unrivalled geographic reach," said Co-op chief executive Peter Marks.

The acquisition would provide "rocket fuel" for the group's growth plans, he added.

"There is a strong strategic fit between the two businesses, with both focused on the highly competitive top-up and convenience shopping market."

The Co-op is a mutual company owned by 2.5 million members.

Besides its supermarket estate, it is Britain's third largest pharmaceuticals chain, the biggest provider of funeral services and the largest independent travel business.

Somerfield comprises 880 outlets nationwide and generated net sales of 4.2 billion pounds in the year to April, with underlying earnings of 233 million pounds.

"We believe that we can learn from each others' strengths to ensure we continue to develop the best local grocery shops in Britain," added Somerfield chief executive Paul Mason.

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