Co-op bids for Nisa in supermarket battle

THE Co- op is in talks to buy convenience store chain Nisa in a deal said to be worth £140m.

As the shake-up in Britain’s grocery market continues, Nisa said it had granted the Co- op a period of due diligence in the hope an offer will be made as soon as possible.

It comes after Sainsbury’s pulled back on its decision to buy Nisa this month, after getting cold feet when the Competition and Markets Authority (CMA) referred Tesco’s £3.7bn takeover of Booker for an investigation.

According to a source, Sainsbury’s asked Nisa to extend its period of due diligence but the chain, which has received takeover offers from a number of bidders, refused.

Nisa said yesterday that the key elements of the agreement with Co-op are still being fleshed out, but conversations so far have been ‘pragmatic and constructive’. In a letter to members, Nisa chairman Peter Hartley said: ‘It is anticipated that the Co- op could be in a position to make a final offer to the members for your consideration.

‘Should an offer of merit emerge from this process, it will be for you, the members to decide on whether to accept it.’

Co- op’s potential tie-up with Nisa is the latest strategic move in the grocery industry, which has been consolidating to see off the threat posed by discounters Aldi and Lidl, and tech giant Amazon, which took control of healthy retailer Whole Foods in a £10.7bn deal this week.

Tesco is hoping to close its £3.7bn takeover of convenience chain Booker by Christmas – though the deal is being investigated by the CMA who claim shoppers in areas where there is an overlap between Tesco shops and Booker-supplied stores could face higher prices.

Morrisons, meanwhile, earlier this month struck a deal with convenience shop chain McColl’s to supply Safeway- branded products. Asda owner Walmart is also reportedly mulling a bid to snap up discount retailer B&M for £4.4bn.

The recent consolidation comes as Aldi announced it would create 4,000 new jobs in the UK while Lidl pledged to open between 50 and 60 supermarkets a year.

Last week Lidl also overtook Waitrose to become the UK’s seventh largest grocer while Aldi is the fifth largest grocer after overtaking Co- op. Amazon, meanwhile, has dramatically slashed prices in Whole Foods stores.

Customers are enjoying lower prices on products like Whole Trade bananas, organic eggs and free range rotisserie chicken.

Steven Esom, a retail veteran who was managing director of Waitrose from 2002 to 2007, said: ‘Any business looking at their cost base can see the advantage of consolidation. People are looking at making their businesses more efficient and clearly any type of inflation passing through – that’s got be mitigated.

‘So I would think that businesses are doing this to mitigate the effects of inflation.’