Nisa Today's directors said they had instructed the executive and its advisers to continue negotiations with Costcutter and Icelandic investment bank Kaupthing.
As part of the deal, called Project Tomorrow, Nisa members will own 60 per cent of the equity in the merged company and will be eligible to receive a cash payment.
An EGM to vote on the revised proposal is expected to take place in October. A full consultation with members across the UK will take place ahead of the vote.
It was revealed that the board was considering the sale and leaseback of a distribution warehouse, but it would be considered and voted on alongside the merger and would not be entered into in isolation. The board also confirmed that founder and chairman Dudley Ramsden is fully supportive of the new deal.
Speculation arose last week that Ramsden was considering abandoning the deal, despite being offered£9 million in cash and shares in exchange for relinquishing an executive position at the enlarged company.
Plans for the merger were first unveiled in May. Under the original proposals, management was to own 42 per cent and members 40 per cent, with Icelandic investment bank Kaupthing taking an 18 per cent stake.
The boards of both companies believe combining resources will improve their ability to compete with the big supermarkets.
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