The Co-op is reported to have signed a five-year deal to supply Costcutter stores, following the collapse of Palmer & Harvey (P&H) yesterday.

Costcutter, which has 2,200 stores, is to switch supplier from P&H to the Co-op from Spring next year following the news that the wholesaler had fallen into administration with the loss of 2,500 jobs.

The Costcutter group operates 2,200 eponymous stores as well as Mace, Simply Fresh, Supershop and Kwiksave convenience stores. The Co-op will now become the exclusive wholesale supplier to the full symbol group, according to reports.

Under the terms of the agreement independent Costcutter retailers will also be given the opportunity to become Co-op franchisees.

The collapse of Palmer & Harvey has led to 2,500 redundancies, while 900 additional jobs are at risk. The company, which has been operating for 92 years, called in administrators from PWC after rescue talks with an American private equity firm collapsed.

Earlier this month Nisa members voted in favour of the Co-op’s £137.5m takeover bid for the Nisa business, which comprises 3,200 convenience store outlets.