The Co-op Group has begun exclusive talks with convenience grocer Nisa to discuss a merger worth over £130m.
In July the Group was revealed to be in a bidding war with Sainsbury’s for the mutual, with the supermarket giant offering more cash upfront and emerging as the preferred bidder. However talks stalled in August following concerns over possible intervention from the competition watchdog, and the Group re-entered negotiations.
A potential deal with Sainsbury’s is said to have caused concern among Nisa’s shopkeepers, who fear a takeover by Sainsbury’s could lead to demutualisation. The Co-op Group is seen as a better fit with Nisa’s mutual structure.
In July, the Guardian quoted one person close to the negotiations as saying: “The Co-op would have been a better fit for its mutual values. Sainsbury’s is just a plc trying to do what Tesco has done. It’s an extreme outcome, Nisa has no need to sell itself.”
Related… Paul Gosling: Co-op Group eyes take-over of mutual Nisa
In a letter to members, Peter Hartley, Nisa chair, said: “In line with the Board of Nisa’s duty to act in the best interest of all Nisa members, your board has granted the Co-op a period of exclusive due diligence from today [30 August].”
He confirmed the Group intended to “progress matters as quickly as possible, in the hope that a transaction can be finalised”, subject to due diligence.
“Should an offer of merit emerge from this process, it will be for you, the Members, to decide on whether to accept it,” added Mr Hartley. “However, it is important to stress, that there is no guarantee that an offer will be forthcoming.”
Any deal would have to be approved by 70% of the 1,300+ Nisa members.
A spokesman for the Co-op said: “We can confirm that we’ve entered into a period of exclusivity with Nisa, which will provide the opportunity for us to carry out more detailed due diligence in the coming weeks. After this period and subject to approval from our board, we hope to be in position where we can put forward an offer to Nisa members.”
