Nisa’s board has “unanimously” recommended the Co-op’s offer worth up to £137.5m to its shareholders.

The member-owned retailer and wholesaler said the deal would “bring significant immediate and long-term value” for Nisa members.

It added that the deal, should it be successful, would give Nisa access to greater scale, the Co-op’s own-label range, and allow them to retain the independence of operating stores how they wish.

Under the terms of the deal the Co-op will pay up to £137.5m for the entire Nisa shareholding plus associated deal costs of up to £5.5m.

Nisa’s shareholders would receive an equal initial payment, a deferred share payment over three years and “additional rebates” payable over four years.

The Co-op would also take on Nisa’s existing debt of £105m.

Nisa’s members will now vote on the deal, which is also subject to clearance by the Competition and Markets Authority, in November.

Nisa had previously been the subject of interest from Sainsbury’s, but the supermarket giant pulled out of talks over fears of an intervention by the competition watchdog.

It comes as retailers and wholesalers rush to consolidate in the wake of Tesco’s £3.7bn swoop for wholesale giant Booker.

Nisa chairman Peter Hartley said: “The board was unanimous in its decision to recommend the Co-op offer. While the business has made significant strides in recent years, we firmly believe that the combination with the Co-op is in the best interests of our members.

“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.”

The Co-op’s food boss Jo Whitfield added: “This acquisition provides the opportunity to create an even greater and more compelling member-led presence within the UK convenience sector.

“We believe we have presented a compelling offer for Nisa members, with a future proposition that would bring them our award-winning own-label products and wide range.

“Over the past three years, Co-op Food has been completely transformed through a convenience-led focus on delivering great value products for our members and creating real value for them and their communities.

“Co-op and Nisa have achieved so much on their own to support local communities, but together I believe we can go from strength to strength.”

The Co-op said the Nisa acquisition would allow it to “strengthen its presence in the wholesale convenience sector”, extend its reach into communities where it does not currently have stores and enhance its buying power.

The mutual plans to retain the Nisa brand and operate it as a standalone business, but laid out a seven-point plan detailing how the acquisition would benefit the symbol group.

Among those benefits, the Co-op said the deal would “significantly enhance” Nisa’s product offer, allow it to source a wider range of products and provide it with the possibility to be part of regular management meetings held at a local level.