Norwegian Reitan group, the second largest shareholder in Swedish Axfood, is about to divest its 15.6 percent holding – and Odd Reitan denies re-election to the Board.
”A sale increases financial flexibility and enables us to better capture growth opportunities in our existing businesses ”, says Odd Reitan, Chairman and CEO of Reitangruppen.
One move could be to launch Rema 1000 in Sweden. Recently, Odd Reitan said the main reason for Rema 1000 not being introduced in Sweden was the Axfood-holdings.
Axfood has been a close collaboration partner to Reitan Group. This summer Axfood Närlivs AB and Reitan Convenience Sweden AB extended the cooperation agreement until the end of 2020 for the supply of kiosk and food retail products for Reitan concept stores (Pressbyrån, 7-Eleven and Shell 7-Eleven on the way).
Axfood has also been a significant purchasing partner for Reitan Group’s grocery chain Rema 1000. Same thing goes for Rema 1000’s largest competitor Norgesgruppen.
The official line is that significant growth opportunities in all of Reitangruppen’s existing businesses have prompted a more focused strategy towards developing its directly controlled companies. As a consequence, Reitangruppen is exploring options regarding its 15.6% holding in Axfood, the Swedish food retailer listed on Nasdaq Stockholm.
The timing is perfect as the Norwegian currency is weakening towards the Swedish and would make the investment in Axfood an even better deal for the Group
”Since we became a shareholder in 2008, Axfood has performed strongly and the management team has done an excellent job developing the company. Our aim with this process is to increase focus on our directly controlled companies”, says Odd Reitan in a press release.
He has been a member of the board of directors since 2009. As Reitangruppen’s shareholding may be significantly reduced, it has decided not to nominate a person for election at Axfood’s annual general meeting on 16 March 2016. Consequently, Odd Reitan will not be available for re-election to the board of directors when the period for which he has been elected expires.
But there are more than financial benefits for the Reitan family company.
When increasing the shares in Axfood Reitan had a plan to bring about closer cooperation at chain level with Axfood, and it is primarily discount chain Willys attracts. Retail paper Handelsbladet FK wrote that Reitan was hungry for a budget establishment in Sweden which both Odd Reitan and his son Ole Robert Reitan previously said in interviews with the paper.
During Odd Reitan’s board membership in Axfood, no joint ownership or cross-ownership around Rema 1000 and Willys took cooperation further.
Maybe this was a disappointment for Odd Reitan. In January this year, in an interview with Sydsvenskan in a pause at a Reitan Convenience franchiser’s meeting in Malmö, Odd Reitan said:
”As long as we have such a large block of shares in Axfood I do not think we will introduce Rema 1000 in Sweden. Willys is Sweden’s answer to Rema 1000.”
This obstacle might soon be gone. While the supply chain for the Swedish convenience market is secured for five more years, the Reitan family might take the chance to connect Rema 1000’s successful markets in Norway and Denmark with Sweden which is the Nordic country where discount chains has the lowest impact on the grocery market.