Booker has agreed a £40 million deal to buy the Budgens and Londis brands from Musgrave.

It will take on all 1,630 Londis c-stores and 167 Budgens franchises.

The two fascias have struggled recently and posted a combined loss of £7.4 million in 2014 on sales of £833 million, but Booker said it believes that the “acquisition will be earnings neutral in the first complete year of ownership and earnings enhancing thereafter.”

While announcing the deal, Booker reported full-year results that showed ore-tax profits up 14% to £138.8 million.

Musgrave chief executive Chris Martin said: “The grocery market in Great Britain is experiencing fundamental and permanent structural change, with intense competition and a deflationary environment.

“Given these challenging market dynamics, we carefully evaluated all of the possible options for our GB business. Having received a proposal from Booker, we concluded that a sale to Booker is the right thing for the group and would be the most advantageous outcome for our retailers, colleagues and suppliers in Great Britain.

“The agreement also includes the development of a strategic partnership with Booker.

Booker will be a good fit for retailers and will continue to develop the Budgens and Londis brands, utilizing the supporting supply chain and head office.

“Retailers will benefit from Booker’s buying strength, an extensive operational footprint throughout Great Britain including a nationwide distribution and cash and carry infrastructure and a service culture that is proven to meet the needs of independent retailers.

“Musgrave GB has been a loss-making business and while the decision to sell Budgens and Londis is difficult, it will allow the group to drive forward with its growth strategy which is about developing our market-leading retail, convenience and cash and carry brands in the Republic of Ireland, Northern Ireland and Spain.

“We see the opportunity for growth in the improving Irish economy. To support our growth agenda, Musgrave is developing a strategic partnership with Booker. We will explore opportunities to collaborate on store formats, digital innovation, buying opportunities, sharing of best practice and to achieve cost savings and efficiencies for the business.”