Bronfman Nailing Down Ikea Buy

Matthew Bronfman is in the final stages of negotiations with Ikea to buy Ikea Israel, Haaretz has learned.

The Blue Square Co-Op Society, which owns 75 percent of Ikea Israel, has to sell its holdings under a court order. The society is expected to shortly ask the courts for permission to hold an auction, in order to maximize the revenue for its members. But the parent company Ikea in Sweden has the right to veto the choice of buyer.

Sources affiliated with Ikea Israel say Bronfman and the parent Ikea have reached an understanding that he's the buyer.

Ikea is apparently adopting a tactic similar to Domino's Pizza: when the local chain foundered, it made any sale of the assets contingent on its approval of the buyer. It refused to countenance selling to a single investor or to the chain's manager then and now, Assaf Greenberg.

The Blue Square society has yet to publish a tender for its stake, as it's still discussing the manner of sale with Ikea headquarters. The Israeli shareholders are unhappy about Ikea's veto right over the identity of the buyer.

Ikea Israel's franchise extends to 2010, though there is an extension option.

Since the news broke that the society would be selling its Ikea stake, more than 30 potential buyers got in touch, including Gain Holdings, Dudi Wiessman of the Dor Alon group and even, reportedly, Eliezer Fishman.

Bronfman had earmarked Ikea Israel as his next acquisition after buying Blue Square Israel and the controlling interest in Israel Discount Bank from the state, as part of an investment consortium.

How much is Ikea Israel actually worth? The latest appraisal by the accounting firm of Kesselman & Kesselman PwC says the 75 percent stake is worth $25 million. The sources say the society will refuse to give Bronfman a discount below that price.

Matthew Bronfman's spokesman refused to comment.