I guess most of you haven't really paid that much attention to what's been happening at Interflora, the flower delivery company. But it's been in the news of late, and I have found myself fascinated by the story.
Just to fill in the background for you, the business was once owned by the florists that it services, but about 18 months ago it was sold for £23.3m to private equity firm 3i as part of a deal that was, at the time, hotly contested by many florists. But 3i got its way and ended up with a 65% stake in Interflora, while the management took 14% and florists had 21%. Then, last week, the business was the subject of a £65.7m bid from US rival FTD, in a deal that will see the florists treble the value of their shareholding - but lose the opportunity to retain a stake in the business. So Interflora members end up with a nice little cheque, while 3i laughs all the way to the bank. Worse, the florists in future will have no say over the way the business is run. Little wonder that some are defecting to a new mutually-owned delivery service.
So, an interesting tale from a sector not really related to ours. Except that demutualisation is now a hot topic in grocery with the proposed merger of Costcutter and Nisa-Today's. And there are clear parallels between these two tales. The big difference, I guess, is that Nisa-Today's members will probably end up with 51% of the demutualised business and so, in theory, will have more say over its future. But I am still concerned that once the demutualisation process has started, it will be difficult to end, particularly when you have an investor like Kaupthing, which will inevitably be looking to do a 3i as quickly as possible.
Nisa-Today's biggest strength has always been its mutual status. You undermine that at your peril - as Interflora's florists have found to their cost.
Just to fill in the background for you, the business was once owned by the florists that it services, but about 18 months ago it was sold for £23.3m to private equity firm 3i as part of a deal that was, at the time, hotly contested by many florists. But 3i got its way and ended up with a 65% stake in Interflora, while the management took 14% and florists had 21%. Then, last week, the business was the subject of a £65.7m bid from US rival FTD, in a deal that will see the florists treble the value of their shareholding - but lose the opportunity to retain a stake in the business. So Interflora members end up with a nice little cheque, while 3i laughs all the way to the bank. Worse, the florists in future will have no say over the way the business is run. Little wonder that some are defecting to a new mutually-owned delivery service.
So, an interesting tale from a sector not really related to ours. Except that demutualisation is now a hot topic in grocery with the proposed merger of Costcutter and Nisa-Today's. And there are clear parallels between these two tales. The big difference, I guess, is that Nisa-Today's members will probably end up with 51% of the demutualised business and so, in theory, will have more say over its future. But I am still concerned that once the demutualisation process has started, it will be difficult to end, particularly when you have an investor like Kaupthing, which will inevitably be looking to do a 3i as quickly as possible.
Nisa-Today's biggest strength has always been its mutual status. You undermine that at your peril - as Interflora's florists have found to their cost.
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