Convenience retailer McColl’s has been formally bought out of administration by its existing trading partner Morrisons in a deal that saves all its 16,000 jobs and its stores.

The news was announced hours after Sky News reported that the supermarket chain had won a race with petrol station powerhouse EG Group for a rescue.

Moments after the collapse of McColl’s was formally announced to the City, joint administrators from PwC confirmed: “On appointment, the joint administrators completed a sale of the business and assets of the group to Alliance Property Holdings Limited, part of the Morrisons Group, the group’s largest supplier.

“The deal successfully transfers all 16,000 staff, 1,100 shops across the UK and also includes Morrisons agreeing to rescue the group’s two pension schemes which have more than 2,000 members.”

It added that the wholesale agreement between Morrisons and McColl’s would continue without interruption and all sites would continue to trade under the terms of the so-called pre-pack administration.

Financial details of the transaction were not released but Sky’s City editor Mark Kleinman revealed that Morrisons beat EG through an improved 11th hour offer that would see McColl’s lenders repaid all £160m of outstanding debt immediately and in full.

Another factor that helped shape the deal was the fact that Morrisons was also among the company’s major creditors.

McColl’s has struggled under the weight of COVID-related disruption, which includes product distribution, coupled with the strain being placed on shoppers’ budgets by the rising cost of living.