Swedish grocer prefers closed-door makeover

Axfood AB

10/11/2021 14:15

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
    LONDON, Nov 10 (Reuters Breakingviews) - Sweden’s top
supermarket chain is opting for an overhaul behind closed doors.
ICA Gruppen’s  ICAA.ST  majority owner is partnering with local
pension fund AMF to buy https://www.icagruppen.se/en/archive/press-archive/2021/statement-by-the-board-of-directors-of-ica-gruppen-in-relation-to-the-public-offer-by-ica-handlarnas-forbund-and-amf
 the wholesale retailer for 107 billion Swedish crowns ($12.1
billion). After speculation about a private equity raid, ICA’s
minority shareholders have minimal reason to grumble. The offer
is 29% above ICA’s share price before the rumours started
swirling on Oct. 22. And at 21 times this year’s expected
operating profit, it’s a premium to local rival Axfood
 AXFO.ST , which trades on 19 times.
    ICA should find a makeover in private easier. Fashioning a
response to the pandemic-driven online grocery boom is the top
priority, but will be expensive. Net debt around 4 times EBITDA
after the deal is less than this year’s 7 billion pound private
equity buyout of Britain’s Morrisons  urn:newsml:reuters.com:*:nL4N2R014I. But with his
hefty investment needs and a top line growing at a measly 2%
next year, Chief Executive Per Stromberg may have an equally
narrow margin for error. (By Karen Kwok)
    
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 (Editing by Ed Cropley and Oliver Taslic)
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