The players at the heart of the Costcutter/Nisa-Today's merger have moved swiftly to outline their vision. Rod Addy reports

Amerger of Costcutter and a mutual company the size of Nisa-Today's is bound to involve strong feelings and a lot of speculation, as is the involvement of venture capitalist Kaupthing. So it's not surpri­sing that those at the heart of the deal have moved swiftly to outline their vision, dubbed 'Project ­Tomorrow', to The Grocer. They want to win over the trade, particularly the 950 retail and wholesale shareholders who could block the grand design if more than 25% veto the deal in a vote on July 3.
The men at the centre of the ­move insist it will ultimately strengthen the hand of indepen­dent retailers. According to Nisa-­Today's, the merged force would have 5,000 franchised and com­pany-owned stores and a 6% market share of the c-store ­sector - more than Tesco, Spar or the ­Co-ops. Both ­Costcutter and Nisa-­Today's say their individual ­retail and wholesale brands would be maintained post-merger.
Neil Turton, Nisa-Today's chief operating officer, says the plan couldn't be more timely for indepen­dents. &aquot;If we can improve services together, we increase ­efficiency for our retail customers. And the sector has been challenged by John Fingleton, chief executive of the Office of Fair Trading, to ­become more efficient.&aquot;
Turton highlights Fingleton's inclination to remain less sym­pa­thetic towards the cause of the independents against the major supermarkets while their supply chain is not operating at peak. But some argue that talk of increased buying ­power is nonsense. After all, they say, doesn't Costcutter, as Nisa-Today's biggest customer, buy through the organisation anyway?
For Colin Graves, executive chairman of Costcutter, the bene­fits lie as much in savings to be achieved by joining forces. &aquot;It's true that Costcutter accounts for 35-40% of volumes through Nisa-Today's ­central distribution,&aquot; says Graves. &aquot;But there are still effectively two ­buying departments.&aquot;
Turton adds: &aquot;There's a lot of dupli­cation. We each have space planning departments, for example, so a merger makes sense.&aquot;
Nisa-Today's insures ­Costcutter, its biggest customer, for £500,000 against collapse, another cost that could be cut if the deal goes ahead.
But Graves argues that there's also much to be gained from pooling separate areas of expertise. &aquot;Costcutter has its own EPoS solu­tion; we do drop shipment supplies; we specialise in in-store develop­ment; and we run national TV and press adverts. Nisa-Today's does none of these. Costcutter also has a strong active field sales force that can help Nisa-Today's retailers grow their businesses.&aquot;
On the other hand, Nisa-Today's expertise in negotia­ting the best rates on retail services, such as utilities, will help Costcutter retailers.
For a long time, Nisa-Today's chairman Dudley Ramsden has consistently aimed to boost Nisa-Today's clout through a merger. As far back as November 1997, he spoke about ­creating a united buying group for indepen­dents to stand against the multiples. He is known to be disappointed that Nisa-Today's was blocked from bidding for Londis, which was bought by Musgrave in 2004.
However, some disaffected ­retail and wholesale members within Nisa-Today's claim this deal, which was unanimously approved by all 18 board members, is not about strengthening the hand of indepen­dent retailers at all. Surely, they say, the individuals directly ­involved stand to gain substan­tially.
Concerns were fuelled last week by the lack of detail on the merger, but Ramsden has written to shareholders and is briefing members.
Turton ­acknowledges that Rams­den and Graves will both receive a 10% stake in the new company, while Rams­den will get an additional £6m in preference shares as a Nisa-Today's founder. But he says Nisa-Today's board members who are buying stakes are cashing in long-term ­investment plans and ­taking ­salary cuts of 25%. Conversely, each wholesale and ­retail member stands to gain an instant £50,000 in cash, plus £30,000 in shares over two years.
But what if Kaupthing decides to cash in its stake in a few years? Kaupthing says it is a longer term investor that wants to build the business through bolt-ons and invest­ment in services. It will have a minority stake - so, if it sells, the group would not fall apart.
All round, the deal sounds positive for those involved. Turton says: &aquot;This was an important decision, taken with maturity. It could give independents a real chance against the supermarkets.&aquot;n

Board structure
According to Nisa-Today's, Colin Graves would be chief executive of the company created by the proposed merger and Dudley Ramsden would be chairman.In addition, there would be two other executive members: Neil Turton as commercial director and Costcutter MD Nick Ivel, who would become operations director.There would be seven non-executive members, including three Nisa-Today's members, one representing larger retailers, one representing smaller retailers and one representing wholesalers. Two non-executive directorships would go to David Sherratt, head of principal investments at Kaupthing, and Ben Barnett, vice president of Kaupthing's principal investments. Finally, there would be two independent non-executive directors, Malcolm Hepworth, former retail boss at The Co-operative Group, and Ian Blakey, former chairman of Hull and East ­Yorkshire Hospitals Trust.