Co-op Group in swoop for convenience store chain Nisa

The Co-operative Group is in exclusive talks to buy convenience store operator Nisa, entering the fray days after larger food retailing rival Sainsbury's suspended its own bid talks for the company.
Nisa said it would consider all 'serious queries and offers' for the retailer. Picture: Alan WatsonNisa said it would consider all 'serious queries and offers' for the retailer. Picture: Alan Watson
Nisa said it would consider all 'serious queries and offers' for the retailer. Picture: Alan Watson

The Co-op is thought to have tabled a £140 million bid for Nisa, whose 1,300 shopkeeper members run 3,000 stores.

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“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,” Co-op said.

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“Following this period and subject to approval from our board, we hope to be in a position where we can put forward an offer to Nisa members.”

Britain’s biggest retailers have set their sights on operators within the wholesale and convenience store market after Tesco made an agreed £3.7 billion takeover bid for Booker earlier this year.

Sainsbury’s, Britain’s second-biggest supermarket giant, had been seen to be under pressure to respond to its bigger rival’s move on Booker. However, on 15 August, Sainsbury’s said it had suspended the talks with Nisa until the Competition & Markets Authority gave its verdict on the Tesco-Booker deal.

Details of the Co-op talks were also shared with Nisa shareholders by the convenience store group’s chairman, Peter Hartley.

He said in a letter: “The board of Nisa has held a number of positive discussions with the Co-op in recent weeks, following its reaffirmation of interest in making an offer for your company.

“Your board has granted the Co-op a period of exclusive due diligence from today. Thereafter, and subject to the results of the due diligence, it is anticipated that the Co-op could be in a position to make a final offer to the members for your consideration.

“Should an offer of merit emerge from this process, it will be for you, the members, to decide on whether to accept it.”

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However, Nisa is not shutting the door on other potential bidders, with Hartley adding: “As you are all aware, our business and the convenience sector continue to evolve at pace and the board of Nisa will continue to review serious queries and offers which emerge.”

One analyst commented: “Co-op seems to have struck while the iron is hot.”

Nisa recently completed a £120m refinancing, and has won some new contract wins recently as a turnaround plan under chief executive Nick Read begins to show results.

A takeover of Nisa would be the latest step in a wave of consolidation within the food market. Sainsbury’s took over Argos-owning Home Retail Group a year ago, with the catalogue showroom household goods retailer buttressing the parent’s trading performance since then.

Alongside Tesco’s potential merger with Booker, Amazon has entered the food sector with the acquisition of Whole Foods, and Morrisons has restored the Safeway brand on some products.

Meanwhile, Aldi and Lidl continue to sharpen price competition and put profit margins under pressure in the sector, with the German discounters currently having an aggregate market share of a bit more than 10 per cent. Co-op has 6 per cent.

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Marks & Spencer has opened talks to sell its 27-store business in Hong Kong and Macau to franchise partner Al-Futtaim as the British retailer continues to reduce its overseas footprint.

The group said it had started discussions on the potential sale of the stores, which Al-Futtaim would continue to operate under the M&S franchise. The Asian retailer already operates 43 of M&S’s stores across seven markets in the Middle East, Singapore and Malaysia.

Paul Friston, M&S’s international director, said: “In November we set out our plans to create a more sustainable, profitable and customer-centric international business for M&S by focusing on our established partnerships.

“Al-Futtaim is a key partner to M&S in Asia and the Middle East and we are both committed to putting the customer at the heart of everything we do”.

M&S first opened stores in Hong Kong in 1988 and said the business was profitable with a “loyal customer base”.

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