Axfood’s acquisition of City Gross approved by the Swedish Competition Authority
The Swedish Competition Authority today cleared Axfood’s acquisition of City Gross.
The acquisition creates conditions to strengthen City Gross’ competitiveness and for growth in the hypermarket segment, which will challenge the market leaders and increase competition in this segment.
– Today’s approval from the Swedish Competition Authority is welcome, entailing that we soon can start the work on developing and strengthening City Gross. This is a compelling deal for both Axfood and City Gross, and it also benefits Sweden’s consumers. With our knowledge and experience, we look forward to creating even better conditions for City Gross to challenge and strengthen its position and the overall competition in the hypermarket segment, says Simone Margulies, President and CEO of Axfood.
On 11 June, Axfood announced that an agreement had been reached with Bergendahl Food Holding (“Bergendahls”) to acquire shares corresponding to 90.1 percent of City Gross Sverige AB (“City Gross”), which entails that Axfood increases its shareholding in City Gross from the current 9.9 percent level to 100 percent. The consideration amounts to SEK 2 billion on a cash and debt free basis, and the acquisition will be financed through a combination of existing cash and credit facilities. The acquisition gives Axfood a more distinct market position in the hypermarket segment, thereby expanding the Group’s presence and reach. The acquisition is expected to contribute positively to Axfood’s earnings per share by 2026 the latest.
Completion of the transaction was subject to approval by the Swedish Competition Authority, which today announced that the acquisition is left without any further actions, which means that the deal has been approved. Completion of the deal was also subject to review by the European Commission in accordance with the Foreign Subsidies Regulation, which was completed with an approval on 10 September. The transaction will be completed on 1 November this year after which Axfood becomes owner of City Gross.
– Following today’s positive announcement from the Swedish Competition Authority, we can now complete the deal with Axfood. We are convinced that this creates the best conditions for City Gross’ future development and market position. From Bergendahls’ side, we wish Axfood and City Gross the best of luck and we look forward to following City Gross’ development and success, says Lars Ljungälv, President and CEO of Bergendahl & Son AB.
Since 2021, Axfood has through its minority stake exercised joint control in City Gross and has a long-term cooperation agreement in for example logistics, assortment and purchasing, private label products, store safety, finance, HR and IT. Axfood intends to pursue a number of improvement initiatives to strengthen the customer offering, implement chain management and make operations more efficient, all with the purpose to strengthen City Gross to reach profitability by 2026 the latest and thereafter gradually strengthen profitability. City Gross will be reported as a separate operating segment in Axfood’s financial reporting.
In line with previous communication Axfood incurred transaction costs of SEK 26 million related to the acquisition during the second quarter 2024.
Further information about the transaction can be found in Axfood’s press release dated 11 June 2024.
For further information, please contact:
Magnus Törnblom, Head of Press Axfood, tel +46 70 266 27 12, [email protected]
Alexander Bergendorf, Head of Investor Relations Axfood, tel +46 73 049 18 44, [email protected]
The information herein is such that Axfood AB (publ) is required to make public in accordance with
the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person listed above, at 9.15 p.m. CET on 15 October 2024.
This document is an English translation of the Swedish original. In the event of any discrepancies, the Swedish version shall govern.