The Co-operative Group has made a £143mln formal offer to buy convenience grocery chain Nisa.
Nisa said its board has unanimously recommended the takeover bid to its 1,400 members, who will vote on the deal in November.
The offer includes £137.5mln for buying the total shareholding of Nisa, plus the payment of associated deal costs of up to £5.5mln. Co-op would also take on Nisa’s existing debt of £105mln.
The acquisition is subject to approval from the Competition and Markets Authority (CMA).
Under the offer, Nisa shareholders would receive an equal initial payment, deferred share payment payable over three years, along with additional rebates payable over four years.
Co-op plans to retain Nisa as a standalone business and brand.
Nisa’s shopkeeper members will also be given the opportunity to continue to work independently while having full access to Co-op’s product range and the option to apply to become a Co-op franchise.
Nisa says Co-op takeover is in members' best interests
"While the business has made significant strides in recent years, we firmly believe that the combination with the Co-op is in the best interests of our members," said Nisa chairman Peter Hartley.
"The Co-op offers the right blend of buying capability, convenience expertise, and respect for the heritage of our business, to enable our members to fully thrive in this new partnership.”
Nisa restarted talks with the Co-op after J Sainsbury put discussions on its own takeover offer with the convenience chain on hold until the CMA has ruled on Tesco's £3.7bn takeover of Booker in late October.
“Over the past three years, Co-op Food has been completely transformed through a convenience-led focus on delivering great value products for our members and creating real value for them and their communities," said Jo Whitfield, Food chief executive of Co-op.
“Co-op and Nisa have achieved so much on their own to support local communities, but together I believe we can go from strength to strength."
Co-op to improve market share on Nisa deal, says Cavendish
Cavendish Corporate Finance's Jonathan Buxton believes the offer will allow Co-op to increase its market share and push back against the discounters, such as Aldi and Lidl, which are gaining ground in the grocery sector.
"Through this offer, Co-op is likely seeking to increase efficiencies within their operations and adapt to changing consumer demands," he said.
"Consolidation of this kind allows grocers to invest in companies which will dispel inefficiencies in the supply chain and enable them to absorb more price hikes, preventing a further loss of market share to discounters, such as Aldi and Lidl.
"We expect to see more acquisitions of this nature from the big four as they compete not only with each other, but also the tech giants, like Amazon, which are encroaching on their markets."