SOK Corporation takes over Spar retail chain in Finland

Concentration of ownership in retail branch surges forward

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The concentration of ownership in the Finnish retail branch surged forward on Wednesday when it was announced that Finland’s Spar stores would be taken over by SOK Corporation, which is part of the S Group.
      SOK announced on Wednesday that it had bought more than 92% of the shares of Spar Finland from its five main owners. The largest of them is the Swedish Axfood concern. Also agreeing to sell of their shares were customers and funds of Ingman Finance, Odin Finland, Pohjola Insurance, and WIP Asset Management. SOK is to make an offer to buy the remaining eight percent of Spar shares as well.
      If Spar customers continue to shop at their familiar locations, it will mean a great leap forward in the market share of the S Group.
     
The deal was worth EUR 50 million, of which Axfood is to get about EUR 38 million.
      SOK is paying about EUR 49 apiece for the shares - representing a premium of nearly EUR 20 for the A series of Spar shares, and EUR 27 for the K shares.
      Spar Finland has a total of 280 retail outlets. About 180 of them are franchise stores owned by private merchants. The rest are under the direct ownership of Spar Finland.
     
If the deal is finalised, Spar will be linked with the S Group as a subsidiary. The business activities will be run by the group’s 22 regional cooperative stores, and not the central cooperative concern SOK, which officially set up the deal.
      SOK Corporation promises to honour existing merchant contracts, the most recent of which will be in force for several years. As they expire, the stores will be linked with the chains of the S Group, taking on the brands of other chains in the group, such as Alepa and S-Market.
     
SOK Corporation CEO Kari Neilimo said on Wednesday that the aim of the deal is to secure the future of cooperative retailing in Finland, and to strengthen and maintain retail operations in Finnish ownership.
      Discussions on the move were initiated by Axfood about six months ago. Axfood deputy CEO Lars Nilsson says that there were discussions with other Finnish retailers, but that SOK won out in the end.
      As part of the deal, SOK will get a 37% holding in Tuko Logistics, which serves as Spar’s wholesaler. Neilimo says that the shares will probably be sold.
      The S Group uses Inex Partners as its main wholesaler.
      The S Group has increased its market share in retailing of perishable goods in Finland. According to figures from last spring, it has a 34% market share in food sales. The K Group was slightly bigger with a 35% share, and observers believe that the S Group will have bypassed the K Group in the summer.


Links:
  S Group web site
  Spar Finland web site

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