Nisa board approves £137.5m The Co-op Group

October 12, 2017 by David Tran
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Nisa board approves £137.5m The Co-op Group

The Board of Nisa Retail Limited, the member-owned retail and wholesaling group, has unanimously recommended the bid from The Co-op Group to its shareholders in a deal that could total up to £137.5m.

The offer, if successful, would bring "significant immediate and long-term value for Nisa members, access to greater scale, access to the award-winning Co-op range". These include the Co-op own label proposition, retention of their independence of operating their stores how they want, while also enabling them to remain part of a member-owned organisation within the growing UK convenience retail sector. Co-op fought off interest from Sainsbury's, which saw their talks cease with the convenience retailer during the summer.

The Co-op Group’s offer 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, results in a total payment by the Co-op Group of up to £143m.


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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.

Co-op would also take on the existing Nisa debt of £105m as well as providing additional benefits which would include:

The opportunity to source products from the Co-op, the UK’s fastest growing convenience retailer, which recently reported its fourteenth consecutive quarter of like-for-like sales growth and has a proven heritage and track record in wholesaling. The move would also help allow:

- The ability to significantly enhance the existing product offer, especially within the fresh and chilled categories, with Co-op’s award-winning own-brand range. 
- The ability to source a wide range of products from a provider with a history of supporting a varied portfolio of stores, from small convenience stores right up to 35,000sq ft.
- The opportunity to partner with a like-minded business which is member-owned, community-focused and ethically-guided.
- The continuation of key aspects of Nisa members’ independence to fully source the range that best suits their stores, and to operate those stores how they want.
- The possibility to be part of regular senior management engagement meetings, held at a local level, and the ability to continue to have a voice on how Nisa is run.
- The opportunity to apply to become a Co-op franchise, benefitting from the Co-op brand and additional services. 

The acquisition of Nisa would also bring clear benefits for the Co-op, allowing it 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. It would also provide the opportunity to support like-minded independent retailers, with a clear sense of commitment to serving and supporting their local communities.

Nisa members would see existing service levels maintained with a view to improving these over time, as the Co-op 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. The Co-op and Nisa teams will be out on the road at regional events in the coming weeks to explain the offer to members and answer any questions they may have. A vote of the membership will be held in early November.

Nisa chairman Peter Hartley; “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.”

The Co-op Food CEO Jo Whitfield 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," she continued.

“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.”

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

Nisa reports strong H1 2017 performance

Nisa Retail, the delivered wholesaler and convenience retail specialist, is pleased to announce a positive H1 trading period for the 26 weeks to 1 October 2017.

Highlights:

Strong H1 performance with total sales of £728m, +12.4% on last year.
Strong non-tobacco sales of £505m, +0.8% on a like for like basis, with tobacco sales falling 2.7%, better than the wider market.  Our core retail trade showed like for likes of +1.9%.
Sales driven by strong growth in new stores and new Member recruitment, with 409* new stores in H1, compared to 188 last year with net new at +284 (last year -110).

The strong performance was aided by new business wins, driven by both existing Members expanding their estates and significant new Member recruitment. The strong Member recruitment reflected continued investment in our offer, a good return from marketing initiatives, and Nisa’s award winning own label range.

Appointment of interim CEO

Further to the succession planning announcement of 29 September, Nisa is pleased to announce that Arnu Misra has been appointed interim CEO.

Arnu has been an Independent Non-Executive Director at Nisa since November 2016. He is a highly-experienced retail executive, having held significant senior executive roles at Matalan, Asda, and Loblaw’s in Canada. He also spent six years as CEO of private equity backed Cannons Health, doubling its membership base before selling to Nuffield Health.

Arnu has a strong track record developing value for stakeholders and is highly experienced working with low cost business operating models.

He takes over the role from Nick Read, who joined in December 2014 with a remit to stabilise and set out a future strategic direction for the Company and its Members.

Commenting on the half year results and interim CEO announcement, Hartley said: “I am pleased to report strong trading in the first six months of the year. We have continued to serve our existing Members well, and as a result new Member recruitment has shown significant gains. We are delighted to have Arnu as interim CEO; he has a wealth of retail experience and is ideally placed to lead Nisa as we seek to optimise the service, benefits and opportunities we can bring our Members.”

Arnu Misra, interim CEO of Nisa, commented: “I am pleased to be leading Nisa at a time of great change for the convenience sector as top-up shopping continues to increase. I have spent many years working in the retail industry and am looking forward to drawing on this experience to provide Nisa Members with an exceptional value proposition that delivers for their customers. I am pleased to see strong new Member recruitment in our H1 numbers and look forward to a busy final quarter, as the important festive trading seasons draws near.”

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