The chair and CEO of Southern Co-op have written to members telling them the proposed merger with the Co-op Group is the best option to save the society from the likelihood of liquidation after three years of losses.
Chief executive Ben Stimson and chair Janet Paraskeva issued the statement to clarify the society’s position after seeing online discussion of the plans.
“This is your society, and you care about its future,” they wrote. “However, we are concerned that some of what is being shared does not reflect the full picture so we want to provide you with a clear and open update on the situation.
“Southern Co-op has made losses for the past three years. Over the last year, trading has become more difficult, and we have relied on ongoing support from our banks and suppliers to continue operating. 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.
“We know many members are asking whether there is another option. We have asked the same question ourselves, repeatedly, over recent months. The honest answer is that there is no solvent alternative available to us now which we could deliver in the time frame and without exposing the business to a much greater risk, and it’s important that we are clear about what this means.
“If the merger does not go ahead, the most likely outcome is that Southern Co-op will enter insolvency through administration. This would put jobs at risk, lead to the loss of stores and negatively impact our suppliers.”
The letter follows the announcement earlier this month that that Co-op Group and Southern Co-op have are planning to join forces “to create a co-operative society with greater scale, resilience and impact for members, customers, colleagues and communities across the UK”.
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If approved, the proposal would result in 300,000 Southern Co-op members joining the 7 million Co-op Group members as members of an enlarged Co-op Group.
Southern operates more than 300 food, funeral and Starbucks coffee branches across the south of England, with the Group operating over 2,300 food stores, 800 funeral homes and a wholesale business supplying around 8,000 outlets, as well as a leading legal services and insurance business.
Announcing the merger on 8 April, the two societies stressed the benefits of creating a bigger society as well as finding a way forward for Southern.
“The co-operative model is more important than ever for the health and success of communities across the UK,” said Co-op Group chair Debbie White, “and a combined co-operative, bringing together over 300 years of co-operative experience, will provide new and strengthened opportunities for members, customers, colleagues and suppliers of both of our co-operatives.”
The Group’s interim CEO Kate Allum added: “Joining forces across Co-op Group and Southern Co-op will create new opportunities for members to have access to a greater range of benefits across a wider society, with more trading opportunities, and in turn more benefits for them and their communities.”
On Southern’s part, Stimson said: “The Co-operative Group shares our values and our commitment to democratic membership, ethical sourcing and fair reward, as well as our dedication to supporting local communities. By coming together, we can secure the co-operative future of Southern Co-op as part of a stronger combined Co-op Group, whilst creating an even stronger voice nationally and internationally to advance the co-operative cause.”
Paraskeva added: This proposal has been carefully considered, and we believe it represents the best path forward for Southern Co-op. We are now asking our members to consider the proposal and have their say. This is their decision, and we are committed to providing all the information they need to make an informed choice about the future of their co-operative.”
In their new letter to members, Stimson and Paraskeva add: “This is not a position we ever wanted to be in. Like you, we believe strongly in the value of an independent co-operative, and we have explored every realistic option to protect that.
“However, our responsibility now is to be open about the situation and to act in a way that protects as much as possible for our members, colleagues, communities and supply chains. That is why we are recommending the merger with Co-op Group.
“It is not an easy decision, but it is the one that protects more jobs, more services, and more value for members than any other option available to us today.
“We understand this is a lot to take in, and you may have questions. We encourage you to read the full information available and to get in touch if there is anything you would like to ask. Thank you for taking the time to consider this and please remember, that as a valued Southern Co-op member, your vote matters.”
Both organisations already work closely together through the Federal Retail Trading Society (FRTS) buying and supply group.
The proposal is subject to approval by Southern members and mandatory regulatory approvals. Subject to these approvals being received, the transfer of engagements is expected to take place in Q3 2026, at which point Southern members would become members of an enlarged Co-op Group.
However, both businesses are expected to continue to be run independently for a period of time after that point, while CMA approval is sought. During this period members of each society will continue to receive the separate member benefits currently offered by the two societies when trading.
