Manchester-based The Co-operative Group is set to buy rival supermarket chain Somerfield in a deal worth around £1.57 billion.

The Co-operative, which is run mutually for its 2.5 million members and has 4,300 grocery outlets in the UK, has been in discussions with Somerfield since April. Somerfield has 880 stores employing about 55,000 people.

Combined, the supermarket group is expected to enjoy sales of £8 billion a year, although the deal is still subject to regulatory clearance from the Office of Fair Trading.

Peter Marks, chief executive of The Co-operative Group, said the deal is good news for consumers and for competition in the food and drink market.

"The acquisition of Somerfield will provide the rocket fuel for our three-year growth plan," he added.

In May, it was reported that The Co-operative Group had safeguarded around 3,000 jobs by deciding against moving its headquarters out of central Manchester.