Hakon purchases Ahold’s 60% stake in ICA

Hakon to purchase 60 percent stake in ICA

Hakon to purchase 60 percent stake in ICA

On the 11th of February, Hakon Invest AB informed that Royal Ahold NV had decided to get rid of its 60 percent stake in ICA for as much as 21.2 billion Swedish crowns, or slightly over $3 billion.

The acquisition of Ahold’s stake in ICA

According to a statement, Dutch retailer Royal Ahold NV decided to sell the majority stake in supermarket chain for more than $3 billion to Hakon Invest AB which already held as much as 40 percent in the business. As it was underlined by Dutch retailer Royal Ahold NV, the company decided to get rid of its majority stake because it only held 50 percent of voting rights. But the fact is that both shareholders of Swedish supermarket chain ICA were not able to share the control over ICA. Someone once said:“Power is everything,” and this rule applies to the acquisition of ICA.

The conclusion to sell the majority stake in ICA stemmed from the review conducted by Royal Ahold NV. The company underlined that the continuation of the status quo was not in line with its strategy and hence it decided to sell the stake in ICA. Back in September 2012, the company informed that it had been considering options for the stake in Swedish supermarket chain ICA.

Jeff Carr, chief financial officer at Royal Ahold NV, stated that the company was satisfied with the price of the transaction as it mirrored the real value of the business. On the other hand, Claes-Goran Sylven , chief executive officer at Hakon Invest AB, outlined the vision of the new chapter in the ICA’s history, stating: “We gain a simpler structure and a greater resolve in the organization.” Yet the company announced that it would not pay a dividend in  2013.

The acquisition of the Ahold’s 60 percent stake in ICA is subject to regulatory approval, but if the deal is accepted, Hakon Invest AB will be ruling alone as it wanted. According to data, ICA operate more than 2,200 food stores and recorded sales of slightly over 96.85 billion Swedish crown, or $15 billion, in 2012.

Two companies, two different strategies

Certainly, the acquisition of the Ahold’s 60 percent stake in ICA is aimed at securing the Hakon Invest AB’s ownership of the Swedish supermarket chain. In addition, the transaction will also clarify the company’s ownership structure which gave both Royal Ahold NV and Hakon Invest AB a hard time.

The sale of the 60 percent stake in ICA is a way of getting rid of a burning issue. Moreover, the sale of the stake in ICA is in line with the latest strategy of the company which aims to reverse the acquisition approach implemented years ago. It does not mean that the company does not want to expand, yet it wants to concentrate on businesses which are fully controlled by it. The company did not, however, reveal the value of the capital gain on the sale of its stake in ICA. It was underlined by Ahold CFO Jeff Carr that the company would disclose its plans closer to the finalization of the transaction.

Jay Raol

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