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UK's Co-op Group agrees to buy Nisa Retail for up to £143M

The U.K.'s Co-operative Group Ltd., one of the world's largest consumer co-operative societies, agreed to acquire convenience store operator Nisa Retail Ltd. for up to £143 million, the two businesses said in a joint statement Oct. 10.

Nisa's board has recommended its shareholders accept the offer, according to the statement. Nisa is a mutual-style company, which means it is owned by its independent retail members. Its members are expected to vote on the deal in November.

Under the terms of the deal, Co-op has agreed to buy 100% of Nisa for £137.5 million plus associated deal costs of up to £5.5 million. Nisa shareholders will receive an equal initial payment, a deferred share payment payable over three years, as well as additional rebates payable over four years.

In addition, Co-op will assume Nisa's £105 million in debt.

The acquisition will add Nisa's network of 3,200 stores across the U.K. to Co-op's 3,800 branches. Nisa's revenue of £1.25 billion in its 2017 fiscal year ended April 2 is dwarfed by that of its suitor. Co-op's annual revenue was £9.5 billion, although it did not specify whether that was for a calendar or fiscal year.

Nisa members will gain access to Co-op's own-label proposition. They also will retain independence in operating their stores while remaining part of a member-owned organization. Co-op is owned by its more than 4.5 million members.

The purchase of Nisa will allow Co-op to strengthen its presence in the wholesale convenience sector, enhancing its scale and buying power.

"The Co-op offers the right blend of buying capability, convenience expertise and respect for the heritage of our business, to enable our members to fully thrive in this new partnership," Nisa Chairman Peter Hartley said in the statement.

Nisa announced Aug. 30 that it had entered into a period of exclusive due diligence with Co-op. Supermarket operator J Sainsbury Plchad been in exclusive talks to acquire Nisa but reportedly halted discussions after U.K. antitrust watchdog the Competition and Markets Authority announced on July 12 a detailed investigation into rival Tesco Plc's proposed £3.7 billion acquisition of wholesaler Booker Group Plc.