The gloves have come off in the increasingly bitter row surrounding Bibby Line's failed bid to take over buying group Nisa-Today's.
Sir Michael Bibby whose Bibby Line Group owns 51% of Nisa's biggest member, Costcutter wrote to Nisa's shareholders earlier this month accusing a senior executive at the buying group of leading him to believe the bid would be accepted.
The letter also threatens to remove Costcutter's business from the buying group.
But Nisa chairman Mark Pullen this week fired off a defiant response, denying the accusations and claiming that Costcutter would have more to lose than Nisa from a split.
The letters suggest a marked deterioration in the relationship between Nisa and Bibby and mark the first public admission that the two companies could go their separate ways.
Sir Michael, managing director of Bibby Line, was still hopeful that a deal could be reached, he said in his letter: "Our preferred option is still for Costcutter to work with Nisa going forward if suitable arrangements can be found to bring the Costcutter and Nisa businesses together, as otherwise there will be a substantial increase in costs and reduced buying power."
However Pullen vehemently refuted the claims and accused Bibby Line of scaremongering.
"If Costcutter seeks alternative sources of supply once our contract with them ends in 2014, then it may increase unit costs to us but not, in our view, by nearly as much as it is likely to do for Costcutter," he wrote. "Fear should not be our motivation in accepting the offer."
The letter also alleges that Nisa is currently supplying Costcutter "at a loss" and is effectively being subsidised by Nisa's other members.
This is disputed by Costcutter boss Colin Graves, however.
In the meantime, while the "senior executive" at Nisa-Today's was not named, Nisa chief executive Neil Turton said Sir Michael's letter had been designed to embarrass him personally. He admitted he had been involved in three meetings with Sir Michael to discuss the possibility of a takeover, but denied that they had discussed the deatails of an offer. He also claims he had tried to discourage Bibby Line from making an offer in the weeks before Bibby Line made the approach.
At one of the early meetings, the possibility of Nisa buying Costcutter had also been discussed. However, a price could not be agreed, he added.
Bibby Line currently distributes Nisa's ambient products and after acquiring a stake in Costcutter in September 2007, was bidding alongside logistics rival DHL for a £75m-a-year contract to distribute all Nisa's goods from 2011. But when Nisa awarded the contract to DHL at the end of July, it prompted a takeover approach.
The second and final bid offered members £1,200 per share, valuing the company at £134m, with each member having a maximum of 100 shares, but the board said this was an undervaluation.
Turton added that the majority of Nisa members backed the board's decision to reject the offer from Bibby Line. "Members have never been more unified than they are now," he said.
Bibby: Nisa fascia growth poses threat to Costcutter
Sir Michael Bibby told The Grocer the loss of the Nisa contract was not the only problem to emerge in Bibby's battle to buy Nisa-Today's. There was a "strategic conflict" between Costcutter and Nisa because the buying group was growing its own Nisa fascia. Recruiting independents to its symbol was harming Costcutter, which operates 1,600 symbol stores, he suggested.
Nisa started off as a buying group but in recent years has developed its own Nisa fascia to more than 600 independent stores across the country. Nisa plans to grow this fascia into a nationally recognised brand.
"It's a problem that Nisa is developing its own fascia, which is competition with Costcutter," said Sir Michael. "We need to find a resolution. It's in both parties' interests to find the best way forward."
Sir Michael Bibby whose Bibby Line Group owns 51% of Nisa's biggest member, Costcutter wrote to Nisa's shareholders earlier this month accusing a senior executive at the buying group of leading him to believe the bid would be accepted.
The letter also threatens to remove Costcutter's business from the buying group.
But Nisa chairman Mark Pullen this week fired off a defiant response, denying the accusations and claiming that Costcutter would have more to lose than Nisa from a split.
The letters suggest a marked deterioration in the relationship between Nisa and Bibby and mark the first public admission that the two companies could go their separate ways.
Sir Michael, managing director of Bibby Line, was still hopeful that a deal could be reached, he said in his letter: "Our preferred option is still for Costcutter to work with Nisa going forward if suitable arrangements can be found to bring the Costcutter and Nisa businesses together, as otherwise there will be a substantial increase in costs and reduced buying power."
However Pullen vehemently refuted the claims and accused Bibby Line of scaremongering.
"If Costcutter seeks alternative sources of supply once our contract with them ends in 2014, then it may increase unit costs to us but not, in our view, by nearly as much as it is likely to do for Costcutter," he wrote. "Fear should not be our motivation in accepting the offer."
The letter also alleges that Nisa is currently supplying Costcutter "at a loss" and is effectively being subsidised by Nisa's other members.
This is disputed by Costcutter boss Colin Graves, however.
In the meantime, while the "senior executive" at Nisa-Today's was not named, Nisa chief executive Neil Turton said Sir Michael's letter had been designed to embarrass him personally. He admitted he had been involved in three meetings with Sir Michael to discuss the possibility of a takeover, but denied that they had discussed the deatails of an offer. He also claims he had tried to discourage Bibby Line from making an offer in the weeks before Bibby Line made the approach.
At one of the early meetings, the possibility of Nisa buying Costcutter had also been discussed. However, a price could not be agreed, he added.
Bibby Line currently distributes Nisa's ambient products and after acquiring a stake in Costcutter in September 2007, was bidding alongside logistics rival DHL for a £75m-a-year contract to distribute all Nisa's goods from 2011. But when Nisa awarded the contract to DHL at the end of July, it prompted a takeover approach.
The second and final bid offered members £1,200 per share, valuing the company at £134m, with each member having a maximum of 100 shares, but the board said this was an undervaluation.
Turton added that the majority of Nisa members backed the board's decision to reject the offer from Bibby Line. "Members have never been more unified than they are now," he said.
Bibby: Nisa fascia growth poses threat to Costcutter
Sir Michael Bibby told The Grocer the loss of the Nisa contract was not the only problem to emerge in Bibby's battle to buy Nisa-Today's. There was a "strategic conflict" between Costcutter and Nisa because the buying group was growing its own Nisa fascia. Recruiting independents to its symbol was harming Costcutter, which operates 1,600 symbol stores, he suggested.
Nisa started off as a buying group but in recent years has developed its own Nisa fascia to more than 600 independent stores across the country. Nisa plans to grow this fascia into a nationally recognised brand.
"It's a problem that Nisa is developing its own fascia, which is competition with Costcutter," said Sir Michael. "We need to find a resolution. It's in both parties' interests to find the best way forward."
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