Nisa members protest Costcutter merger

By Anita Awbi

- Last updated on GMT

Related tags: Stock, Supermarket

More than 20 members of Nisa-Today's buying group have joined
forces to fight the proposed merger with Costcutter, fearing the
deal will jeopardise the co-op's decision-making powers.

The Nisa Members Association (NMA), an amalgamation of wholesalers and retailers, sent a letter to shareholders around Britain to protest the move that would see the company change from a co-operative to be largely controlled by a board of directors.

In the letter to Nisa's shareholder base of 900, the NMA said: "We believe this (merger) may be the wrong way forward for our company, whose main purpose is to ensure shareholders get the lowest possible price of goods at maximum transparency."

The NMA urged for the development of an independent controlling association rather than a group of directors, whom allegedly stand to personally benefit from the £200m merger.

However Nisa shareholders stand to get a £50,000 windfall from the deal and management on both sides say the merger would increase buying power, allowing the smaller grocery stores to compete more successfully with the likes of Tesco and Asda.

Neil Turton, the chief operating officer at Nisa, said management had yet to meet shareholders to explain the merits of the deal, adding "it feels rather early for them to settle on a viewpoint".

It was announced last month that Nisa and Costcutter would join forces, but with both companies operating different management structures speculation has mounted over the logistics of the deal.

While Costcutter has always been a privately-owned business, Nisa is a mutually-owned firm where all members take a share of ownership when they join the group.

There are more than 900 retailers and wholesalers in the co-operative, running 5,000 shops around the UK. They will vote on the merger on 3 July.

Although under the new deal members will keep a stake in the business, it will be reduced to 40 per cent, while a board of directors made up of Costcutter and Nisa executives will take a majority share. The Icelandic investment bank Kaupthing will take a smaller share.

The proposed merger comes as independent retailers and buying groups continue to lose out to the 'top four' British supermarkets that are able command a better deal from suppliers through scale.

Related topics: Market Trends

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