Metropol

Sainsbury’s ready to pounce on corner shops

Oliver Shah
June 18 2017, 12:01am,
The Sunday Times

Sainsbury’s is closing in on a takeover of Nisa Retail, the member-owned convenience store group — but is set to face a rebellion from independent shopkeepers opposed to its demutualisation.

Britain’s second-biggest supermarket chain is understood to have won a bidding war with the Co-operative Group for Nisa, which has 2,900 stores and £1.3bn in sales. Sainsbury’s is said to have offered £2,500 a share, valuing Nisa at £130m, based on 52,000 shares in issue.

Insiders said the mutual’s board decided to make Sainsbury’s the preferred bidder at the end of last week, even though Co-op matched and then offered to beat its rival “significantly”.

A sale would mean windfalls of up to £625,000 each for Nisa’s members, who are allowed to own a maximum of 250 shares. Yet many of the 1,400 shopkeepers have blocked attempts to demutualise Nisa in the past, and the board’s decision has already caused a furore. Letters circulating this weekend called for the resignation of Nick Read, Nisa’s chief executive, and accused management of trying to “hoodwink” members by marketing the business without their permission.

Sainsbury’s swoop comes amid upheaval in the grocery sector, with the traditional players under pressure from discounters Aldi and Lidl and the shift to online shopping. It mirrors Tesco’s plan to buy Booker, the wholesaler and owner of the Budgens, Londis and Premier brands. Tesco’s deal is being investigated by the competition watchdog.

Amazon cranked up the heat on Friday by unveiling a takeover of Whole Foods, prompting shares in Tesco and Sainsbury’s to drop by more than 4%.

In recent years Nisa has been troubled. It rejected two takeover approaches between 2007 and 2011 from its rival Costcutter, which then cancelled a buying contract with Nisa in 2014, taking away £500m of sales. It was then beset with governance problems as an 18-year-old director launched a leadership bid and was sacked over an alleged data leak.

Chris Baker, Nisa’s chairman at the time, commissioned a review by the City grandee Lord Myners. The report described its governance system as “broken” and said there had been a “breakdown of trust” between the members and the City-facing management team. Myners recommended reforms including moving to a system of one member, one vote. Baker resigned last year after failing to push through the reforms.

Nisa’s shareholder votes are controlled by a small number of regional bosses, who collect proxies from smaller members and vote in a block. Nisa would need at least 50% shareholder approval to push through a sale. The auction, which is being overseen by the bank Lazard, started after rumours of interest from the cash-and-carry chain Bestway.

Under Read, who joined in 2015 from Thomas Cook, Nisa shrank its pre-tax losses from £11.3m to £5.4m last year.

Many of the letters circulating this weekend are critical of Read’s £700,000 pay packet, and question his motives for wanting to sell Nisa to Sainsbury’s instead of the Co-op, which would allow it to “retain mutual status”.

thegeek wrote: Thu 13 Jul, 2017 05.31 Waterloo. It's right next door to a Tesco Express which isn't 24 hours.

(Also according to the Sainsbury's website, it's closed for 31 minutes a week)