Co-op muscles in on the race to capture Nisa
The battle to take control of Nisa took a fresh twist on Wednesday when the Co-op Group revealed it is in exclusive talks on a deal.
That seems to sideline a rival bid from Sainsbury’s, which paused progress on its own £130 million offer because of fears that competition watchdogs would interfere.
Nisa chairman Peter Hartley informed the 1400 shopkeeper members that talks have moved quickly.
He wrote: “During these discussions, the Co-op has confirmed, subject to further due diligence, its intention to progress matters as quickly as possible in the hope that a transaction can be finalised.
“The Co-op is willing to incur costs on its own account to do this. Key elements of the discussion remain ongoing and, while these are not yet resolved, the conversations with the Co-op to date have been pragmatic and constructive.”
The deal is merely the latest in the supermarkets sector, a hotbed of mergers as established players seek to fight back against Lidl, Aldi and the rising threat of Amazon.
Tesco is buying wholesaler Booker while Sainsbury’s has already diversified by snapping up Argos. Morrisons, meanwhile, has signed a supply deal with McColl’s.
The Co-op said: “We can confirm that we’ve entered into a period of exclusivity with Nisa, which will provide the opportunity for us to carry out more detailed due diligence.” The Co-op is likely to pay around £140 million to secure its prize.
Nisa’s members would have to approve any deal but are thought likely to back moves made by chief executive Nick Read, under whom the stores fortunes have turned around.
Last year, Nisa had profits of £7.3 million on sales of £1.3 billion. More than 70% of members must back the deal. Some were said to be unhappy about the Sainsbury’s offer, fearing it will hinder their control of what they are able to sell. The ethos of the mutual Co-op might be regarded as a better fit.
Earlier this month, Sainsbury’s put the brakes on its own talks with Nisa “until it better understands how the CMA would review any deal”.
The Competition and Markets Authority has expressed serious concern that the Tesco-Booker tie-up will hurt competition in many neighbourhoods across Britain.
Nisa buys and distributes groceries for about 3000 small stores. They have done well of late as consumer shopping patterns change to favour smaller, more regular, purchases instead of one large trip to an out-of-town hypermarket.
A takeover deal would help the Co-op Group move on from its disastrous dalliance with the Co-op Bank, which fell into disgrace and had to be taken over by American hedge funds.
The Co-op Group’s stake in the Bank has fallen to less than 2%.
