Shares in Sainsbury’s rose on Monday after it emerged the supermarket has entered into exclusive talks to acquire convenience store operator Nisa.
The grocery giant is understood to have tabled a £130 million bid for Nisa – whose 1,300 shopkeeper members run 3,000 stores – as part of a response to Tesco’s £3.7 billion merger with wholesaler Booker.
Nisa has been working with investment bank Lazard on a sale process and is thought to have received interest from several prospective buyers, including the Co-Op. However, it is understood Sainsbury’s offer, at around £2,500 a share, was favoured by Nisa’s board.
Shares in Sainsbury’s were 2.3% higher at 258.1p in morning trading, taking it to the top of the FTSE 100.
Angus Grierson, head of corporate finance at LGB Corporate Finance, said: “Sainsbury’s move to acquire Nisa is another strategic move for one of the key players in the sector after some substantial deals seen recently in the hyper competitive grocery market, including Amazon-Whole Foods and Tesco-Booker.
“Sainsbury’s move into convenience shows the brand’s determination to remain a key player in the market.”
However, it is understood any deal is highly likely to face an investigation by Britain’s competition regulator.
The deal would face a competition probe on the grounds that it could risk reducing competition and customer choice in the sector, according to people with knowledge of the matter.
An investigation by the Competition and Markets Authority (CMA) would take place along similar lines to the one being carried out in respect to the Tesco-Booker tie up, they added.
Tesco’s merger with Booker, Amazon’s foray into the sector with the acquisition of Whole Foods and the continued rise of Aldi and Lidl has put the supermarket sector in a state of flux.
Mr Grierson added: “With property scarcity playing a bigger role in grocers’ ability to expand, this move signals Sainsbury’s belief that consumers are increasingly moving to smaller, local stores rather than large supermarkets for increase ease and convenience.
“As competition in this area continues to intensify, we would expect to see further acquisitions that will help brands to increase available retail space.”
Sainsbury’s, Nisa and the CMA declined to comment.