Nisa’s board backs purchase by Co-op Group

Members will vote next month on the deal to sell their shares to become partners with the Co-operative Group

The Co-op Group is poised to purchase member-owned retailer and wholesaler Nisa in a deal worth up to £137.5m.

Nisa’s board is unanimously recommending an offer to its members, which, if successful, will give Nisa members access to the Co-op own-label range through the wholesaling business.

In addition, Nisa store owners can apply to become a Co-op franchise, benefiting from the Co-op brand and additional services.

Over the summer, the Group announced a piloting of a franchise model with service station operator MRH, which is contracted to open seven stores with full Co-op branding, which includes own-brand products and the offering of the 5% membership reward.

Related: Could a deal with Nisa change the Co-op Group’s business model?

The Group is proposing to buy 100% of the shares in Nisa for up to £137.5m, plus the payment of associated deal costs of up to £5.5m, which will result in a total payment of up to £143m.

Nisa shareholders will receive an equal initial payment, a deferred share payment payable over three years, as well as additional rebates payable over four years. Nisa also has a debt of £105m, which will be taken on by the Group.

The acquisition of Nisa would also bring clear benefits for the Group, according to a joint statement from the two organisations. It will allow the Group to “strengthen its presence in the wholesale convenience sector, in turn enhancing its scale and buying power for the benefit of all customers, while extending the reach of the Co-op brand into new communities”.

Nisa members will see existing service levels maintained with a view to improving these over time, as the Group plans to retain Nisa as a standalone business and brand, which has around 1,190 members and services 3,200 stores. The ambition is to attract new members to the combined business.

The terms of the acquisition, which remain conditional on the approval of Nisa members and CMA clearance, will be explained to members today.  Over the coming weeks, the Group and Nisa teams will explain the offer to members at regional events, with a final vote taking place in November.

Peter Hartley, chairman of 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.”

Jo Whitfield, chief executive of Food at the Group, 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.

“Over the past three years, Co-op Food has been completely transformed through a convenience-led focus on delivering great value products for our members and creating real value for them and their communities.

“Co-op and Nisa have achieved so much on their own to support local communities, but together I believe we can go from strength to strength.

“If our offer is accepted by Nisa members and approved by the CMA, we can deliver a win-win for two member-led, community-focused organisations, and in the process create a distinctive footprint within the growing UK convenience retail sector.

“We are looking forward to meeting Nisa members at the roadshow events in the coming weeks, listening to their views and answering their questions.”

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