More than 20 members of Nisa-Today’s buying group have joined forces to fight the proposed merger with Costcutter, fearing that the deal will endanger the group’s decision-making powers.
The Nisa Members Association (NMA), made up of wholesalers and retailers, has sent a letter to 900 shareholders around Britain to protest the move that would see the co-operative being largely controlled by a board of directors.
The NMA said: “We believe this (merger) may be the wrong way forward for our company, whose main purpose is to ensure shareholders get the lowest possible price of goods at maximum transparency.”
The NMA have proposed the development of an independent controlling association rather than a group of directors, who allegedly stand to personally benefit for the £200 million merger.
But Nisa shareholders stand to get a £50,000 windfall from the deal. Management on both sides say the merger would increase buying power, allowing the smaller grocery stores to compete more successfully with the likes of Tesco and Asda.
Management has yet to meet the shareholders to explain the merits of the deal, says Neil Turton, the chief operating officer at Nisa. He added: “It feels rather early for them to settle on a viewpoint.”
Nisa and Costcutter announced that they would join forces last month, but with both companies operating different management structures, speculation has mounted over the logistics of the deal.
Costcutter has always been a privately-owned business, while Nisa is a mutually-owned firm where all members take a share of the ownership when they join the group.
There are more than 900 retailers and the wholesalers in the co-operative, running 5,000 shops around the UK.
They will vote on the merger on July 3.
Members will keep a stake in the business under the new deal, although it will be reduced to 40 per cent. A board of directors made up of Costcutter and Nisa executives will take a majority share. The Icelandic investment bank Kaupthing will take a smaller share.
The proposed merger comes as independent retailers and buying groups continue to lose out to the ‘big four’ British supermarkets that are able to use their scale to demand a better deal from suppliers.
