Co-op takeover of Nisa faces resistance before crunch shareholder vote

The Co-op’s £143m takeover of convenience chain Nisa is to go to the wire after a series of stormy shareholder meetings before a vote on Monday.

Nisa said the feedback from recent shareholder meetings suggested growing support for the Co-op offer but other people familiar with the process expressed concern that it would not secure the 75% share of votes required to succeed.

“It certainly feels close,” said one insider. “This is the biggest thing to happen in Nisa’s 40-year history and has major implications for the future of independent retail in the UK.”

Last month, its board recommended that the 1,190 shopkeepers who own the business accept the deal, which includes £20,000 up front as well as deferred payments worth more than £410,000 for those who own 250 shares in Nisa, the maximum allowed.

The Co-op offer values Nisa at about 20 times its current share price. In total, there are about 60,000 shares in issue, with Nisa members each owning between one and 250.

While some members have already cast proxy votes online there is expected to be a big turnout at a shareholder meeting being held on Monday at Leeds United Football Club, already the scene of many ill-tempered showdowns.

The representative of one influential shareholder group told the Guardian it was a “99.9% no” from it. But Roger Higgins, who runs a five-store family business, said accepting the deal was a “no brainer”.

Some of Nisa’s 1,190 members are entrepreneurs running small chains, giving the business a network of 2,400 stores. When it launched in the late 1970s, the goal of the Northern Independents Supermarket Association was “to protect the interests of independents against the insurgence of the national supermarket chains”.

However, Nisa members today are divided with some fiercely protective of its independence while others argue it needs more scale given the backdrop of Tesco’s takeover of Booker and rising prices due to the weakness of sterling.

Tesco’s move on Booker, the wholesaler behind the Londis and Budges chains, set a cat among the pigeons in a market in which about 80% of the UK’s 41,000-plus convenience stores are still independent or belong to buying groups like Nisa.

Nisa has also lost some of its scale after its biggest customer McColl’s defected to the supermarket chain Morrisons in the summer.

“There is growing demand for a tie-up that provides greater buying power,” said a Nisa spokesman. “The Co-op brings seven times the buying power of Nisa, and is offering members the flexibility to trade as they wish and keep the Nisa name.”

Sainsbury’s walked away from a £130m deal to buy Nisa after becoming concerned it would fall foul of competition concerns, while the competition watchdog is expected to give its verdict on the Tesco-Booker deal any day now. It is also thought to be unlikely that the Co-op would return with a higher offer if the one on the table is rejected.

Last week, the Sainsbury’s chief executive, Mike Coupe, said it was looking to expand its convenience arm via franchise or wholesale deals. “We wouldn’t overpay for an asset and that is why we are not involved in that process [Nisa],” he said.