Swedish retailer Axfood has reached an agreement with Bergendahl Food Holding to acquire 100% of the food retail chain City Gross for SEK 2 billion (€180 million).
The acquisition will be financed through a combination of existing cash and credit facilities, the retailer noted.
In 2021, Axfood acquired a minority stake corresponding to 9.9% of the shares in City Gross when it acquired Bergendahls.
The acquisition will allow Axfood to strengthen City Gross’ competitiveness and position it for growth in the hypermarket segment.
Klas Balkow, president and CEO of Axfood, stated, "We very much believe in the potential of City Gross, and as an owner we will invest to develop the concept and make operations more efficient.
"We look forward to working together on strengthening the chain’s market position and more clearly challenge the large players in the growing hypermarket segment, in which Axfood is currently only present through its minority stake in City Gross."
City Gross
City Gross has seen weaker growth in the recent period of high inflation and has undergone internal changes, including rearrangement of the assortment, and new infrastructure in IT and logistics.
The acquisition will also see Axfood expand its reach in the hypermarket segment and help consolidate City Gross' market position.
"This deal creates the best conditions to strengthen the competitiveness of City Gross and its market position [...]. Axfood is the right owner for City Gross in the future to develop the hypermarket concept over time," added Lars Ljungälv, president and CEO of Bergendahl & Son AB.
Axfood will report City Gross as a separate operating segment in its financial reporting.
The acquisition is expected to contribute positively to Axfood’s earnings per share by 2026 at the latest, the company noted.
