Nisa Retail board explores potential sale of member-owned buying group

Nisa Retail has formed a sub-committee of the board to explore the potential sale of the member-owned buying group.

Nisa told its members this morning that it had received “a number of enquires and proposals from companies wishing to engage with Nisa on potential merger and acquisition opportunities”.

In a message posted on its members’ noticeboard, Nisa went on to say: “Given Tesco’s proposed merger with Booker, and the possible benefits that scale can bring to our sector, this is perhaps not unexpected.

“It is the board’s responsibility to respond to these enquiries, and as a result, chairman Peter Hartley has created a sub-committee of the board to review the potential merit of these proposals on behalf of Nisa’s members. The sub-committee includes the chairman, member directors, and executive directors.

“There is no certainty that the board will find merit in any of the proposals. However, should a sufficiently compelling proposal emerge from this process, it will be fully disclosed to the members for their consideration.”

The message concluded with Nisa assuring members that it would keep them informed of any further developments.

The posting of the message to members followed a Sky News story yesterday, which revealed that Nisa had drafted in bankers at Lazard to examine potential sale options.

The reports suggested these plans were still at an early stage and that a sale could be particularly tricky given the mutual nature of Nisa’s ownership. The group is owned by around 1,400 members who hold up to 250 shares each.

Sky said that Lazard would look at the possibility of a demutualisation of the group or the potential of injecting external capital into the group.

Nisa declined to comment on the posting on members’ noticeboards, or the appointment of Lazard.

The buying group is currently in the middle of a turnaround plan after it recorded a £3m loss in 2015, the first in its history. Under current CEO Nick Read, Nisa delivered an EBITDA of £7.3m on sales of £1.3bn. It is also predicting profits of £8.5m this year while Read has said he hopes to grow Nisa sales to £2bn by 2019.

Last week it emerged that Nisa is also looking to secure a £120m refinancing packaging, which will be on longer and more favourable terms than the £100m deal it reached with its banks two years ago.

Nisa has been the subject of two major takeover attempts in recent years. The first came in 2006 when Costcutter launched a bid backed by Icelandic bank Kaupthing. This was fought off by the membership of Nisa, while in 2009 the board rejected a bid from Costcutter-owner Bibby Line Group, claiming that the offer seriously undervalued the business.

Other parties understood to have considered a swoop for Nisa in the last few years include Morrisons and Bestway.

There is renewed focus on consolidation within the convenience grocery market following Tesco’s £3.7bn takeover of the UK’s biggest wholesaler Booker at the beginning of the year.

Booker rival Palmer & Harvey is currently understood to be up for sale, having also recently secured a refinancing deal.