Mccoll’s seeks to better Nisa supply deal

CONVENIENCE chain Mccoll’s is retendering its £2bn supply deal with retailer Nisa, in a potential blow to Sainsbury’s planned £130m takeover of the business.

Mccoll’s has emerged as the unlikely kingmaker in Sainsbury’s swoop on Nisa, as the 1,300-store group provides almost two fifths of Nisa’s revenues through a five-year supply deal set to expire next year.

Industry insiders have questioned whether Sainsbury’s will still want to pay £130m for Nisa if it loses the contract, although a source close to Nisa said Sainsbury’s takeover bid was not conditional on the Mccoll’s contract.

The Sunday Telegraph first reported that Mccoll’s was considering severing its links with Nisa and was understood to have met with Sainsbury’s executives to discuss potential sweeteners to the deal. Mccoll’s is understood to have brought forward its retendering to take advantage of its strong hand.

Analysts believe Mccoll’s could itself be a takeover target, as the major grocers jockey to grab a share of the fastgrowing convenience market, with Tesco also trying to buy Londis and Budgens-owner Booker for £3.7bn.

Jonathan Miller, chief executive of Mccoll’s, told The Daily Telegraph that the firm had received “more than five” first round submissions to its wholesale re-tender and said it represented a “big opportunity” to get a better deal.

Mr Miller declined to comment on whether Sainsbury’s or Nisa had put in bids – although it is understood the latter has. When asked whether Mccoll’s was open to takeover offers, Mr Miller said: “We are focused on running Mccoll’s as an independent business.”

Nisa has a separate contract with Mccoll’s to supply 300 stores it acquired from the Co-op in December, which is unaffected by the retendering.

Nisa and Sainsbury’s declined to comment.

The news came as Mccoll’s announced revenues for the six months to May 28 were up 7.6pc to £504.8m but pre-tax profits fell 45pc to £4.5m, from £8.2m. This was put down to a refinancing and the Co-op stores acquisition.

Mccoll’s shares ended up 2p at 210p yesterday.