Members of independent retail society Southern Co-op have overwhelmingly backed plans to merge with the Co-op Group.
A spokesperson for Southern Co-op said: “At the special general meeting of Southern Co-operative Limited held on 6 May, Southern Co-op members voted in favour of the special resolution to transfer the engagements of the society to a subsidiary of the Co-operative Group. 97.7% of members backed the proposal.”
The society said 13,361 votes were cast, adding: “The strong turnout reinforces the value of member engagement and active participation in co-operative governance.
“This is the first step in the proposal to join forces with the Co-op Group and create a co-operative society with greater scale, resilience and impact for members, customers, colleagues and communities across the UK.”
Southern’s leadership had urged members to back the plan, warning that the business, which has suffered three years of losses amid difficult trading conditions, would otherwise face liquidation.
“Over the last year, trading has become more difficult, and we have relied on ongoing support from our banks and suppliers to continue operating,” wrote CEO Ben Stimson and chair Janet Paraskeva in a letter to members. “That support cannot now be increased within the time available. To continue trading without a merger, we would need a significant level of financial support, and we have not received any offers of funding at that level.”
Related: Southern Co-op says merger with Co-op Group is key to society’s survival
The vote follows reports in The Grocer that OurCoop – formed this year from a merger between Central, Midcounties and Chelmsford Star co-ops – had made an approach to Southern and been rejected.
In a letter to Southern, OurCoop CEO Debbie Robinson and president Elaine Dean wrote: “We believe there is real potential for our societies to build on our existing relationship – on membership, on campaigning, on community programmes – in ways that would benefit the members of both our societies and the communities we serve alongside one another.”
They argued that “the independent co-operative sector within the co-operative movement has something distinct and valuable to offer our members, our colleagues and the communities we serve,” and that this underpinned the OurCoop merger.
They added: “Our board has valued the ways our societies have worked together in recent years, particularly your society’s leadership in the creation of Independent Co-operative Services Limited. Collectively, we have saved c.£29m in costs as part of our shared procurement activity, with £3.5m in savings for your society.
“This is a wonderful example of how independent societies can reduce costs and return more value to members.
“We believe there is real potential for our societies to build on our existing relationship – on membership, on campaigning, on community programmes – in ways that would benefit the members of both our societies and the communities we serve alongside one another.”
Related: OurCoop launches after merger of UK consumer societies
But Stimson and Paraskeva replied: “We have been meeting weekly for the past four months to address serious financial difficulties facing the Society which came to light at the end of last year. The proposal to merge with the Co-operative Group has been made out of financial necessity.
”The scale and immediacy of that need led the board to recommend the proposal for the transfer of engagements with the Co-operative Group.
“Over the past four months the board undertook extensive contingency planning and considered whether support of the necessary scale and liquidity (which between now and the end of June is £40-50m) could be realistically available elsewhere. Having done so, the board concluded that it was not.
“The board recognises the savings achieved through shared procurement and the value of our collaboration to date. We have worked hard to develop a proposal that retains our food volume within the buying group and preserves procurement scale for the benefit of other ISMs.
“We hope you will recognise that the proposal currently before members provides longer-term security for the co-operative buying arrangement as a whole.
“We are deeply conscious of the importance of independent societies and proud of Southern’s heritage, just as you are of yours. We want to confirm that this decision has not been easy for the board or management and has only been taken after exhausting all viable alternatives made available to us.”
The merger with the Group will result in 300,000 Southern Co-op members joining the 7 million Co-op Group members as members of an enlarged Co-op Group.
“Members will now be asked to vote at a second special general meeting on 21 May,” said the Southern spokesperson, “on a resolution to confirm the transfer, as required under the relevant legislation.
“While the outcome of the first vote is encouraging, the second resolution vote is equally critical, and we welcome our members’ continued support and engagement.”
