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IKEA Israel is undergoing a new valuation in preparation of a renewed effort to sell the franchise.

People close to the company said that the valuation, prepared by the Kesselman & Kesselman accounting firm, will price the franchise at about $40 million. An earlier valuation, conducted about a year ago, priced it at only $22 million.

Representatives of the Co-Op Blue Square Consumer Cooperative Association, which owns 75 percent of IKEA Israel, and the international IKEA chain, which owns the remaining 25 percent, decided on the new valuation because the furniture chain's value has risen sharply since the conducting of the earlier valuation.

Co-Op is under a court order to sell all its assets, but the IKEA sale has been delayed due to a number of factors, including the unexpected death of the Canadian businessman who formally owned the minority stake in the Israeli franchise on behalf of IKEA international.

Since the franchise agreement gives the minority shareholder various rights in the sale, including a right of first refusal, there was no chance for moving forward until the shares were officially transfered to the businessman's heir.

IKEA Israel's 2003 sales totaled NIS 323 million, up 6 percent from 2002, while its operating profit grew by 25 percent, to NIS 50 million. However, the household furnishing company's net profit dropped from NIS 33 million in 2002 to NIS 28 million last year.

Sources close to the firm said the drop was due to the fact that 2003 was the first year in which IKEA paid full taxes, which caused its tax bill to jump from NIS 13 million in 2002 to NIS 30 million in 2003.