Sainsbury’s is now in a one-horse race to buy Nisa - but it could still lose.

Nisa agreed to open its books to Sainsbury’s this week as its £130m offer was unanimously recommended ahead of a rival bid from the Co-op.

nisa store of the future

The UK’s second-biggest supermarket chain was granted an exclusive period in which to conduct due diligence on the £1.5bn-sales mutually owned wholesale and retail buying group. But even if a formal offer is confirmed by Sainsbury’s, and the Nisa board recommends it to its members, it’s not a done deal.

Under the terms of Nisa’s convoluted governance - in which votes are cast via regional power blocs - at least 75% of the votes must be in favour of the deal. And despite the prospect of a big payday for Nisa’s 1,400 members, it’s not a racing certainty.

One leading Nisa member admitted he was torn. “I joined Nisa because it is a mutual and I think it has the most to offer a symbol retailer who is looking to grow their business while also retaining their independence. But equally I am aware that consolidation has to happen in our sector. “I have to ask myself, what would Sainsbury’s do for my business? Its breadth of own label and fresh food would certainly improve my offer, but what would my customers think? Would they think we are now just a big corporate? These are the questions that will have to be asked when we see the hard facts of what is involved.”

As well as coming in with the biggest bid, The Grocer understands Sainsbury’s proposal is designed to appeal to as wide a range of Nisa’s members as possible, with retailers able to sign up as a franchisee, or continue to use their own fascia, and the offer also caters to Nisa retailers at different stages in their evolution. The offer also offered more cash up front, while delivering greater scale and better products through its buying power, as well as a reduced risk versus the Co-op offer due to the latter’s exposure to its failing bank. However precise details of the offer will not be disclosed until the formal bid is received and recommended to members by the Nisa board. At this point, under the terms of Nisa’s articles of association, an extraordinary general meeting would be held, no less than 21 days later, to decide.

“There are a lot of hurdles still to jump over,” a Nisa source admitted.

The offer for Nisa appears to scupper the JV Sainsbury’s had been pursuing with rival wholesaler Palmer&Harvey, but the market is awash with rumours that Sainsbury’s Nisa deal might also involve a move to bring other retailers and symbols in to the fold.

The Nisa member said: “There could be a bigger deal out there - we know Sainsbury’s has been interested in P&H for a while. Costcutter and P&H could merge and Sainsbury’s could buy it. Sainsbury’s already works closely with Costcutter owner Bibby, so you could make a case for that sort of consolidation.”

Another source was more sceptical about Sainsbury’s moving into symbol territory. “Sainsbury’s don’t understand convenience. They have a big box mentality and are overspaced. Their stores are horrible, with no USP, with poor service and appalling availability. I’m not sure how much they could teach independents. But perhaps it will create a separate trading unit, so Nisa’s core expertise is retained.”

On the prospects of a successful deal, the source added: “The more progressive Nisa retailers will be hugely protective of their independence. So they will study the offer closely before deciding. But a lot of Nisa members are getting giddy about the amount of money that will land in their laps. For many it’s all about greed.”