Hagar group to divest twenty-three 10-11 stores in the next few months
Arion Bank has decided to remove the retail unit 10-11 from the Hagar group and put it up for general sale.
Preparations are already underway to sell the 10-11 stores, and the company is expected to be put up for sale in the next few months.
This reduces the number of food retail stores owned by Hagar by more than a third.
Eignabjarg ehf, the holding company of Arion Bank, which administers the Bank's holding in Hagar, has instructed the Bank's Corporate Advisory division to prepare the sale of the company’s share in 10-11. Work has commenced to separate 10-11 from the Hagar group and details of how the sale will be arranged are expected to be announced in the next few weeks.
10-11 has been in business in Iceland since 1991 and has been part of the Hagar group since 1999. There are now twenty-three 10-11 stores in Iceland and they employ approximately 230 people. 10-11 stores are open 24 hours a day and the focus is on simple, convenient shopping. 10-11 enjoys a strong brand name and the company’s stores are well located. The Bank has become aware of considerable interest in the company recently.
In the settlement reached by the Icelandic Competition Authority and Arion Bank following the Bank's acquisition of Hagar, the Competition Authority recommended that the Bank investigate the possibility of selling Hagar in one or more units in order to increase competition. It is, however, clearly stated that the recommendation is not meant to impinge on the Bank’s obvious goal of maximising value and securing its interests.
The sale of 10-11 stores is intended to diversify ownership in the food retail market and will give more investors the opportunity to participate in this market. The Bank is thus seeking to accommodate calls for increased competition without compromising its financial interests. 10-11’s share in Hagar’s turnover on the food retail market is just under 7%. Following the sale, the number of food retail stores owned by Hagar will decrease from 61 to 38.
Höskuldur H. Ólafsson, CEO of Arion Bank: “It’s not the role of the Bank to run retail stores and, of course, it is an important part of the process of reconstructing the Icelandic business sector to normalise the ownership structure of Hagar stores. 10-11 is a strong company and an independent unit within the group. By selling these 23 stores we are inviting more investors to participate in the Icelandic food retail market. New owners are bound to stimulate competition by bringing in new focuses and taking advantage of the business opportunities represented by a strong brand name, a high turnover and the excellent locations of the stores.”