Nisa members react to Co-op offer ahead of roadshows

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Nisa members are pressing for more details about the proposed Co-operative Group takeover ahead of regional meetings next week which Nisa members, management and Co-op representatives will attend.

The aim of the six regional meetings, beginning in Scotland and ending in Northern Ireland, will be to explain the Co-op’s offer and clarify issues raised by a 20-page document Nisa Retail sent to its shareholders on October 10.

C-Store has obtained more details about the proposed deal which envisages buying all of the shares in Nisa for up to £137.5m.

The offer comprises a payment of up to £20,000 per shareholder, a deferred payment of up to £1,654 per share and an extra payment of up to 1% of rebateable sales for each shareholder during the four years to the end of March 2022, payable quarterly from June 30 2018 onwards.

The Co-op will take on Nisa’s net debt which was £105m as of July 2.

Nisa chairman Peter Hartley pointed out to retailers that the deal, if approved by Nisa members, would be subject to the approval of the Competition and Markets Authority but no Nisa member would be required to leave the group or divest of their stores.

“Co-op is not seeking to buy members’ stores, or the shares in their independent businesses. These will remain in your ownership,” wrote Hartley.

The offer will be made by way of a “Scheme Arrangement” within 28 days under the Companies Act 2006, which will require a minimum of 75% member approval (measured by value of the equity in the company) in two separate meetings.

A spokesman for the Co-op said: “We’ll be speaking directly with the Nisa members through a series of regional events that are being held across the country as of next week. There will also be a regular Q&A dialogue through their usual communication channels to ensure that all members receive and have access to the same information. We’ll also pick up questions members may have about their own stores through that process.”

Retailers want questions answered

“I urge all retailers to scrutinise all the details and ask all the right questions so we get all the necessary information. There may be questions I haven’t thought of, so we can all help each other.”

Nisa member Rav Garcha

Some retailers are adopting a wait-and-see approach, in the hope that their concerns will be addressed next week.

Several say they do not yet have all the information they need to scrutinise the proposed deal.

Rav Garcha, who runs five Nisa stores in the West Midlands, and is an independent board member of the Association of Convenience Retailers, was worried the information coming from Nisa was “one-sided” and wanted to evaluate “the other side of the coin”.

Some of his concerns were how the takeover would change the way retailers currently ran their business, how much real flexibility they would get, space issues in terms of coping with an increase in fresh products and how close proximity to a Co-op would impact.

“I urge all retailers to scrutinise all the details and ask all the right questions so we get all the necessary information. There may be questions I haven’t thought of, so we can all help each other,” said Rav.

Sid Ali, managing director of Nasco Retail, which has five Nisa stores in Aberdeenshire villages, said the offer was “quite well put together in that it offered a lot more incentive to members who had a smaller amount of shares”.

The previous offer from Sainsbury’s was worth more per share “but if you only had one share it wasn’t a lot”, said Sid.

He was not for or against the deal currently but wanted questions answered about the long term rather than merely in the next four years.

“I want reassurances that this is not a three or four-year deal and just a cheap way of buying out the competition.

“Most will have Co-op stores near them. Will we get access to the 5% dividend that Co-op customers get otherwise why would they buy Co-op brands from us?”

He thought the Co-op should pay more cash up front to compensate those who had a large amount of shares.

People who had 250 shares had approximately £40,000-worth and they were being asked to give that up for just £20,000 up front. “That’s not fair,” complained Sid.

He also questioned what would happen if there was a short supply of a particular product. “Would Co-op stores get preferential treatment? We need assurance on price and availability and that we won’t pay for the deal via increased prices. Surely prices should automatically come down with their buying strength,” he said.

Paul Cheema, co-owner of Malcolm’s Stores, Coventry, said: “We now need to understand what it means for the membership, what the promotion strategy is and the rebate. Until we see that everyone would be stupid to judge Nisa and the Co-op.”

It was not about the price of the shares but the longevity of the business and what the Co-op brought. “I do believe consolidation has to happen,” he added.

Russell Jenkins, co-owner of Milverton Stores in Taunton, Somerset, said members had been given “fairly bland assurances” about availability, the range of goods available and terms and conditions being unaffected “but we need to…get an idea in terms of pricing”.

“It will come down to eyeballing them in the meeting and looking at the character of the organisation,” he added.

A Nisa spokeswoman told C-Store that the Co-op intendded “to ensure that demand for Heritage products is supported and continuity of supply secured through any transitional period”.

Readers' comments (6)

  • Lets hope the usual NISA cabal of VOCAL retailers do not scupper what could be the ONLY deal for some retailers.The ones with multi sites who have INDIVIDUAL tailored packages from NISA must NOT be allowed to ruin things for others

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  • Hi James, I am a poor Grocer. I own nowt but single Nisa share. Since you are now so wonderfully rich could you see your way to sending me a few quid? If not you might be the subject of an evil spell and all your riches may disappear like the co-op's credibility.

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  • Thanks Larry that cheered me up on a wet Monday morning! :D Unfortunately I am not related to our newly minted commentator so am unable to make a counter offer for Nisa.

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  • as a long term member of nisa direct / indirect I personally believe everything is rushed without members getting full details .we are asked to trust ! do we do deals based on trust ? comparing booker - Tesco deal I believe co-op is trying to buy nisa on the cheap and paying money over 4 yrs !! is co-op trying to pay nisa members out of profits made from members purchases over 4 yrs ? offers also has too many riders .

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  • Buying Nisa on the cheap? Based on ebitda and assets it's well over the odds. Nisa members need to smell the roses and realise in 2 years there will no longer be a viable Nisa. Supplier contracts will come to an end and coat will rise based on lack of volume.

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  • THE PERFECT STORM

     

    An interesting week, the shareholders of Nisa were presented with the ‘facts’ relating to the sale of YOUR company to the CoOp, or were you?

     

    It has been widely publicised by your Chairman and the press that your Board of Directors unanimously voted in favour to support the bid to buy Nisa made by the CoOp.   It has been noted that Shareholders requested clarification of the level of support during the meetings, only to learn it was NOT a unanimous decision to support the bid.  The unanimous element was actually that the Shareholders should see the details and decide how they would like to vote. There is still some large doubt that even that happened (certain member directors were actually shaking their heads when that question was asked).  

     

    Ask yourself, have you been lied to by the chairman before the meetings have even commenced?

     

    Robin Brown, Nisas’ Financial Director, compared the current plight of Nisa to a Hollywood movie, acting out his tale of woe and misfortune.  His Perfect Storm is approaching!  

     

    He presented slides of how Nisa would be dwarfed in scale by the volume of the Multiples,  Spar, Bestway and of course the CoOp.  Browns portrayal became even darker once MRG had finally exited Nisa, taking with them their largely tobacco based turnover (he forgot to mention the tobacco bit).

     

    Brown talked at length how back in 2015 the Executive had set out their ambitious 3 year business plan:

    £2bn Turnover

    £20m EBITDA

    Balance sheet standing at £30m

     

    But of course, Browns Perfect Storm has hit East Lincolnshire.  Nisa is in tatters. 

     

    To blame this on the total incompetence of the Executive would only point the finger back at himself.  But, ask yourself, have they been incompetent or is there something more sinister behind the weather front?

     

    Robin Browns presentation, interest and preference was very obviously in favour of the CoOP deal. (You would actually question whether he worked for Nisa or the CoOp)  

     

    Each regional presentation exposed his favour towards the deal a little more, shareholders questions became more focussed, the truth quickly became common knowledge as the members talk amongst themselves.  

     

    It was after the last meeting the bomb dropped, Robin Brown, unbeknown to Shareholders, has a clause in his Contract of Employment which rewards him handsomely, more handsomely than ANY shareholder can achieve through this deal, if YOUR company is sold.

     

    Think back, the CoOp was the Boards second choice, they had previously rejected their offer in favour of Sainsbury, however Sainsbury walked away.  Why?  What did their Due Diligence expose?  You’ll never know, but your Executive, including the since departed CEO, Nick Read, suddenly found interest and appeal in the CoOp, focussing on them as the ONLY choice for Nisas’ future.

     

    The future of Nisa is YOUR future, not the Executives, YOURS. The executive will all receive handsome rewards and departure payments if the CoOp choose not to retain their services. Under their employment contracts, every one of the executive is entitled to a minimum 12 month notice period.  Yet be aware, prior to leaving Nisa, Nick Read presented Nigel Gray with a gift of wealth by extending Nigels notice period to 2 years, which effectively awards Mr Gray with at least £250,000 to leave Nisa!  Governance is in place to prevent this, however did REMCO agree to this amendment?  No, they have no knowledge of it.

     

    Robin Brown concluded his presentation of doom and gloom, handing over to the CoOp, to commence their presentation to Nisa Shareholders the most factual and important information regarding how they would become Nisas owner of choice.  It transpires that the CoOp misunderstood the meaning of factual and important, their presentation was of little substance on how they were proposing to deliver shareholder businesses by way of price, promotions, structure of the business, guarantees etc, however they had many limp wristed promises.

     

    They talked in depth about their marvellous breadth of range, their market leading own label and of course their chilled and fresh range.  They promised access to all of this.

     

    Yet they could not answer, commit or clarify whether Nisa retailers livelihoods would improve from trading under the CoOp?

     

    They focussed on deflecting shareholder questions on subjects to which they obviously didn't have an answer for or actually didn't want to give tell the truth.

     

    It eventually became apparent that a Nisa Retailer will NOT access goods at the same cost price as a CoOp store does!  Nisa stores will immediately be disadvantaged by not being able to access identical cost prices as their closest direct competing CoOp store.

     

    In essence, every Nisa member who values their future should vote NO purely on that fact alone.

     

    To summarise, the roadshows were a platform for Robin Brown to portray such a dark picture of the future that Nisa Shareholders have no option but to sell their mutual business model (Browns retirement fund is certainly hoping that).  The CoOp want to buy Nisa, then demand you jump through hoops to maybe earn, UP TO a small amount of money.

     

    And don't forget, you cannot compete with the CoOps own stores!


    Questions need to be asked. Should Robin Brown, the last of the 3 Amigos, had any input, negotiation or vote on any sale of Nisa due to his undisclosed financial gain on a sale?


    Should Members actually even be considering this deal when your new owners are not going to supply you at the same price as their own stores?

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