STOCKHOLM SWEDEN: Axfood AB has through Dagab Inköp & Logistik AB reached an agreement with Bergendahl & Son AB to acquire 100 percent of Bergendahl Food AB.
The acquisition will result in economies of scale, cost synergies, and increased competitiveness. Through increased efficiency, product range and logistics improvements, this also benefits wholesale customers and Sweden’s consumers.
Axfood also acquires a minority stake corresponding to 9.9 percent of the shares in City Gross Sverige AB as part of a strategic partnership to strengthen City Gross’ market position.
Furthermore, Axfood has entered into a call option agreement to acquire additional shares, up to a total shareholding of 30 percent in City Gross, gradually during a five-year period.
The total consideration amounts to SEK 1.8 billion and in connection with the transaction, Axfood intends to carry out a rights issue of SEK 1.5 billion to maintain a strong financial position and flexibility going forward.
Further, Dagab and City Gross have signed a 15-year delivery agreement that includes cooperation around, inter alia, assortment and IT infrastructure. The transaction is expected to create annual cost synergies of approximately SEK 200 million that are expected to be realised successively up to 2025. Excluding integration and transaction costs, the acquisition is expected to be accretive to Axfood’s earnings per share from 2022.
“We are delighted to have reached this agreement with Bergendahls, who similarly to Axfood has a long term and value-based business perspective. There is a clear industrial rationale to this transaction that creates conditions for strengthening the competitiveness of both ours and Bergendahls’ wholesale customers. On the retail side, I am impressed with City Gross’ recent progress, and am convinced that we through this partnership can strengthen City Gross’ market position within the hypermarket segment, a segment in which Axfood is currently not present,” says Klas Balkow, President and CEO of Axfood.
“This deal creates opportunities to expand City Gross and strengthen our market position, which is a long-term goal and a significant part of Bergendahls’ strategy. Axfood is the right partner for City Gross going forward, and we very much look forward to the development of our hypermarket concept. Wholesale customers will also going forward be well taken care of, as Axfood is at the forefront in terms of the future of logistics,” says Lars Ljungälv, President and CEO of Bergendahl & Son AB.
Upon full exercise of the call option, the initial consideration amounts to SEK 1.8 billion and the total consideration amounts to SEK 2.5 billion, of which SEK 1.5 billion pertains to Bergendahl Wholesale. The consideration for 9.9 percent of the shares in City Gross at completion of the transaction amounts to approximately SEK 0.3 billion.
Upon full exercise of the call option to acquire an additional 10.1 percent and 10.0 percent of the shares in City Gross three and five years after the transaction, respectively, which results in a total acquisition of 30 percent of the shares in City Gross, the consideration for the minority share in City Gross amounts to SEK 1.0 billion in total. All above amounts are on a cash and debt free basis.
Axfood aspires to be the leader in good and sustainable food. Our family of companies includes the store chains Willys and Hemköp as well as Tempo and Handlar’n. B2B sales are handled through Snabbgross, and our support company Dagab is responsible for the Group’s product development, purchasing and logistics. The Axfood family also includes Mat.se, Middagsfrid and Urban Deli as well as the partly owned companies Apohem and Eurocash. Together the Group has more than 11,000 employees and sales of more than SEK 53 bn. Axfood has been listed on Nasdaq Stockholm since 1997, and the principal owner is Axel Johnson.
Axfood AB
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28 May, 5:29 pm GMT+2 · Disclaimer
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