Co-op makes £143m takeover bid for Nisa

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Co-op Nisa

The Co-op Group has officially made a £143 million offer to acquire convenience grocery chain Nisa.

The board of Nisa, which operates as a member-owned retail and wholesaling company, has unanimously recommended the offer to its shareholders.

The Co-op‘s offer consists of buying 100 per cent of the shares in Nisa for up to £137.5 million, plus the payment of associated deal costs of up to £5.5 million. This results in a total payment of up to £143 million.

The offer is expected to be put to Nisa’s 1400 members to vote upon in November.

It is also subject to approval from the Competitions and Markets Authority (CMA).

As part of the acquisition, Nisa shareholders would receive an equal initial payment, a deferred share payment payable over three years, as well as additional rebates payable over four years.

The Co-op would also take on the existing Nisa debt of £105 million as well as providing an opportunity for Nisa members to continue to work in independence while having full access to Co-op’s product range, and the opportunity to apply to become a Co-op franchise.

In addition, the Co-op plans to retain Nisa as a standalone business and brand, which has around 3200 stores, but there are ambitions to attract new members to the combined business.

The full terms of the takeover which remain conditional on the approval of Nisa members and Competition and Markets Authority clearance, is to unveiled to members today.

The Co-op and Nisa teams will be also out on the road at regional events in the coming weeks  to explain the offer to members and answer any questions they may have.

Nisa chairman Peter Hartley said that while the retailer has made “significant strides in recent years, the combination with the Co-op” was in the best interests of 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,” he said.

The Co-op Food chief executive Jo Whitfield said the acquisition proposal would provide an opportunity to create an even greater member-led presence within the UK’s convenience grocery sector.

“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,” she said.

“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.”

The takeover proposal comes less than a fortnight after Nick Read stepped down from his position at Nisa chief executive which he held since December 2014.

With the help of chief financial officer Robin Brown, he has been credited with stabilising and bringing the convenience grocery chain back to profit.

In its half-year report last week, Nisa‘s total sales went up 12.4 per cent year-on-year to £728 million, while retail like-for-likes climbed 1.9 per cent.  It also appointed Arnu Misra as its interim chief executive.

Following Tesco‘s proposed £3.7 billion acquisition of convenience retailer and grocery wholesaler Booker announced earlier this year, Nisa received a number of expressions of interest.

At first it engaged in negotiations with Sainsbury‘s, but The Co-Op swooped in to make deal after the Big 4 retailer decided to pause its talks with Nisa.

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