Nisa backs Co-op takeover

Scunthorpe, Lincolnshire: Nisa’s board has recommended members accept a £143m takeover offer from the Co-operative Group.

The Co-op will pay up to £137.5m over four years, plus £5.5m in transaction costs and take on Nisa’s £105m debt. Nisa would remain a standalone business and brand.

Nisa has 1,190 members and 3,200 stores, adding to the Co-op’s near 3,000. Under the terms of the deal unveiled on Tuesday, Nisa shareholders would receive an equal initial payment, a deferred share payment over three years, as well as additional rebates payable over four years to tie them into remaining with the group.

They could be franchisees of the Co-op or keep Nisa branding. Nisa had £1.25bn in sales in 2016/17 and while the Co-op reported £7.1bn in revenues.

Peter Hartley, chairman, Nisa, said: “The board was unanimous in its decision to recommend the Co-op offer. While the business has made significant strides in recent years, we firmly believe that the combination with the Co-op is in the best interests of our members. The Co-op offers the right blend of buying capability, convenience expertise, and respect for the heritage of our business, to enable our members to fully thrive in this new partnership.”

The Manchester-based Co-op wants to supply third parties and will try to expand Nisa’s wholesale arm, which supplies hotel and restaurant chains.

Jo Whitfield, chief executive of food at the Co-op, said: “This acquisition provides the opportunity to create an even greater and more compelling member-led presence within the UK convenience sector. We believe we have presented a compelling offer for Nisa members, with a future proposition that would bring them our award-winning own label products and wide range.”

Nisa’s board initially backed a deal with J Sainsbury but the supermarket retailer pulled out over competition concerns. Members are believed to favour a fellow mutually owned business in the Co-op.

The pledge to keep a standalone Nisa brand could also win them over although it would reduce efficiency savings from the deal. Members will vote in November.

The deal is subject to approval from the Competition and Markets Authority, which could order store disposals in areas where Co-op and Nisa stores are the only options for local shoppers.