Co-Op, Ikea Resume Talks to Sell 75% Stake in Ikea Israel

Swedish furniture giant Ikea and the management panel of the Co-Op Blue Square Consumer Cooperative Society have resumed negotiations regarding Co-Op's sale of its 75 percent stake in Ikea Israel. The chain supports sale of the stake to Canadian businessman Albert Natt, who represents Ikea in Israel and holds the remaining 25 percent. Natt was unavailable for comment for this report. Ikea declined to comment.

Natt and Co-Op had negotiated in the past but the talks dead-ended on the issue of price. Sources close to Ikea say the global concern and Co-Op have now decided that an agreed-upon third party - apparently accounting firm Kesselman & Kesselman – will determine company value for the deal. Sources close to Ikea Israel believe the new valuation draft is unlikely to differ from the $20 million price tag Kesselman set in 2002. Natt is therefore likely to pay Co-Op $15 million for the stake.

Sources close to Co-Op noted that Natt's purchase has not yet been agreed on and that an investor with a higher bid may yet be found. They reported that negotiations regarding a sale procedure are being conducted, but there is still no agreement.

Ikea holds a right of first refusal on the Co-Op stake so it has great impact in choosing a buyer. There are apparently no other candidates at the moment.

Ikea Israel at this stage consists of one giant outlet operating in Netanya. Expansion plans are on hold until the Co-Op sells its franchise.

In early 2003 its manager, Gil Unger, said at a conference of advertisers that this yearanother outlet should be opened to serve the southern-central area around Rishon Letzion and southwards. During the next 10 years, Ikea Israel plans to open a total of three more outlets, he said.

Ikea Israel sales for the first half of 2003 were NIS 150 million with net profits rising by 7 percent over the parallel to NIS 11 million. Visitors to the single branch remained stable at 160,000. The furniture and housewares store pays about NIS 1 million in monthly rent and is free of bank debt.

Co-Op Blue Square cooperative management panel is divesting the assets of the cooperative society, with court approval. The Co-Op has already unloaded its 80 percent of department store chain Hamashbir Lazarchan to businessman Rami Shavit and 78 percent of supermarket chain Blue Square Israel.