Nisa and Co-op given food for thought at merger meetings

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Nisa members have given their feedback on the Co-op Group’s proposed takeover offer at regional roadshows held by Nisa and Co-op management last week.

The Co-op and the Nisa board will be mulling over members’ concerns and preparing answers to direct questions ahead of the second round of member meetings, scheduled to start next week, before the final membership vote on 13 November.

David Nice, who owns two stores in Essex, said the meeting he attended was “generally positive” and that he was reassured over the terms of the deal.

“The Co-op suits Nisa and it increases our buying power to £7bn. We need to go or grow, and this is a really good fit. Most members seem to agree with me, but you’ll always get some who want to argue.”

He said he had been reassured over the pricing equity of Co-op own brand products. “Products will go to Nisa at the same prices as Co-op stores. It’s just down to Nisa and the way they distribute,” David added.

“I’d rather the deferred share payments were over two years rather than three. But overall I was really impressed with Jo [Whitfield, Co-op chief executive]. She put the points over very succinctly.”

Paul Cheema, co-owner of two Nisa Malcolm’s stores in Coventry, was also upbeat about the regional meetings, and argued that consolidation was inevitable.

“The roadshows definitely helped. I think members understand the offer better now, as well as the options such as the franchise model,” he said.

“You have to look forward and ask what is the future of convenience retailing and what can consolidation bring for us? It’s a scary time right now, and I think it’s inevitable that we will end up partnering with one of the big grocers, so we need to look forward to see where that can take us.

“The Co-op has a really good fresh range, and the younger shopper does find the Co-op attractive for its values and its loyalty card.

“As a former Costcutter retailer I remember the damage when Costcutter and Nisa split and P&H took over. I’ve lived it, and it’s clear that you have to work with the right people, with a strong own label and a supply chain that works.”

Rav Garcha, who owns five Nisa stores in the West Midlands, said he was still unsure how he would vote.

“At the presentation they said the 1% rebate would only apply to sales up to June this year, which seems unfair if you double your volume over the next couple of years. It’s ambiguous though because in the literature it says up to 2020.

“Either way it’s not enough to invest in our stores, which we need to do to gear up to a new supply chain delivered in a different way, and £20,000 isn’t enough to start with.”

He said the Co-op “had the right intentions” over price equity of own brand products. “They’re trying to give us the same costs but it’s all down to the cost of delivery. Co-op own label will be price capped but there’s no limit on how cheap we can sell it.

“Nisa’s Heritage range won’t stick around for long but that makes sense,” Rav added.

Russell Jenkins, co-owner of Milverton Stores in Taunton, Somerset, said: “My wife went to the South West meeting. The message that came back was the retailers are beginning to realise what the choice really means and I think an awful lot of the older longer serving members who have a bit of an emotional attachment are slowly coming to realise that it’s not a choice between the status quo and the Co-op. They are beginning to realise that what is on the table is a choice between the Co-op and a Nisa without any real prospects.

“The emotional attachment is beginning to wear thin and people are starting to look at it a little more clear headedly.”

Readers' comments (3)

  • The co-op's decline is as bad as that of the independent sector. The co-op has withdrawn from sector after sector. They recently sold hundreds of c-stores without doing a deal to continue to supply these stores but now they want to get into wholesale to non-Co-op stores for the first time in their history. Where is the strategy? David Nice says it's down to Nisa and how they distribute. No, it isn't because Nisa won't exist. The idea that both are mutual Is a ridiculous argument. If Co-op group acquires Nisa current Nisa members will lose their vote. Your competitors like Scotmid, Lincolnshire, and various other co-ops will have their say and their vote but former Nisa members will not. There are already areas where there are competing co-ops. Similar logo, same own label range, same promotions, different card schemes, different pricing. How does a Nisa retailer in an area like that fit into the already confused situation?

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  • As with most things NISA ,there is always a possibility of a BAD decision being made.Bibbys offer a few years back may now be looking like a missed opportunity

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  • This is a very poor deal patched up together by some of the board directors, Coop and Lazards who we been now told are are on no sale no fee therefore its in their interest by hook or crook to create a sale for Nisa.

    There are similarities of the Londis Musgrave deal back in 2003, Londis members were offered £10k per share, which was revised to £30k, 50% on completion and 50% after 12 months which was more acceptable by Londis members.

    Some example of utter nonsense in this proposed offer!!

    Coop would take 100% control of Nisa and on completion they are not even paying the asset value for the company. Its like when selling the store the purchaser is not even paying for the value of stock and Fixtures and fittings let alone the goodwill, how ludicrous is that?

    Nisa members receive three payment in 2019,2020,2021 for their share values based on maintaining the turnover to July 2017. Most of the C-store trade has experienced decline in footfall and sales therefore if the purchases drop Coop pays less for shares. This is day light robbery worst than the scammers who come in our shops to distract our staff and steal money!

    Come on if i was to buy a coop shop can i pay over four years and pay less if the store turn over drops?
    Anything can happen in four years, outcome of Brexit, Tesco Booker deal, inflation, interest rates, etc... retailers lease runs out, death, illness, retirement, family issues lost opportunity to sell businesses

    I believe the Coop strategy is clear to have managed stores either owned or franchised therefore more emphasis and investment would go towards franchise where the retailers would be lured into handing over their "Crown Jewels" (goodwill) for a franchise agreement which one can not get out off, we have seen some recent mentions of retailers had to pay their way out of franchise agreements.
    Come on guys (deal makers) we C-store retailers cannot be smooched by glossy corporate language and power of some cash as sweeteners.

    Our independent stores are not corporate investments they are our livelihoods we have to pay our mortgages, living costs, cars, holidays, etc.. from the stores. So GET REAL

    I am up for consolidation and scale but not at risk of losing independence, with onerous strings attached, no future security or clarity.

    If the Coop are going to be as good as they say why would any retailers leave the group?

    The deal has a good chance of being voted through only if the deal makers go back to the drawing board and polish the deal with improvement in the price, two year payments terms with flexibility in the turnover. (suggest three payments one third on completion, one third 12 month and one third 24 months.

    Kishor Patel

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