Red Deer Co-op and Central Alberta Co-op are moving toward an amalgamation of their operations.
The boards of the two co-operatives have struck a tentative deal to merge, effective Feb. 1, 2013. The agreement still requires approval from the members of both co-ops, which could come at special meetings scheduled for October.
Red Deer Co-op’s operations include two grocery stores, two gas bars, two liquor stores, a home and garden centre and a bulk fuel station in Red Deer; a grocery store, a gas bar, a liquor store, a bulk fuel and cardlock station in Lacombe; a cardlock and a bulk fuel station in Stettler; and a cardlock station in Elnora. It’s also developing a gas bar in Stettler.
Central Alberta Co-op has grocery stores, home and agro centres and gas bars and cardlock stations in Innisfail and Spruce View, as well as a bulk petroleum station and a fertilizer supply facility in Innisfail.
Jim Dick, president of Red Deer Co-op, said joining forces makes sense for several reasons.
A combined co-op would enjoy cost savings, he pointed out, with these estimated at nearly $500,000 a year. Members would have more stores to shop at, he added, and each of the co-ops would benefit from the different offerings of their counterparts — such as pharmacies and liquor stores in the case of Red Deer Co-op, and fertilizer products in the case of Central Alberta Co-op.
Both have strong balance sheets, said Dick, and their employees should enjoy greater opportunities in an expanded business.
“We go from $140 million in sales for Red Deer to $212 million for Central Alberta in total,” he said.
Members of both co-ops would have their equity transferred into the combined entity, said Dick, and cash payments under their profit-sharing programs would continue.
“The way things are looking, it should be pretty good,” he said of the future payout potential.
Members of Red Deer Co-op would also become eligible for a full payout of their equity allocation at age 65, instead of 70 as is currently the case, to match Central Alberta Co-op’s policy.
The merged co-op would operate as Central Alberta Co-op Ltd., with its administrative headquarters in Red Deer. But, added Dick, administrative staff would also remain in Innisfail.
He said job losses are not expected.
The amalgamation will be discussed and potentially voted on by Central Alberta Co-op members in Innisfail on Oct. 10 and by Red Deer Co-op members in Red Deer on Oct. 11.
“I can’t see any real substantive difficulties with anybody at a staff level, at a membership level, at a director level having concerns with this.”
If approved at the October meetings, the merger would likely take about 18 months to be fully completed, said Dick. A proposed board consisting of 12 directors from Red Deer, Innisfail, Spruce View and Lacombe has already been formulated.
Dick noted that mergers of co-operatives are becoming more common as competition increases.
“There’s probably been about four to five mergers in the last year out of Saskatchewan,” he said, pointing out that Central Alberta Co-op resulted from the amalgamation of the Innisfail and Spruce View co-ops in 2008.
“We’re starting to see that there’s strength in numbers.”
Dick added that his board is always looking for expansion opportunities, including through amalgamation, so more could occur in the future.
“I would be surprised if there wasn’t.”
hrichards@www.reddeeradvocate.com