Belgian investment group Core Equity Holding has called off its attempt to acquire struggling Dutch high-street retailer Hema.
Core said the talks stranded over what it termed vital adjustments in Hema’s contracts with its franchisees, the Telegraaf revealed on Wednesday.
Core had ambitious plans to expand Hema’s e-commerce operations but could not go through with this because Hema’s franchisees insisted on a substantial part of the profits from online sales be passed down to them. Core then ditched the plan to buy Hema, informed sources told the paper.
Under present terms, an online sale is partly credited to a Hema store in the same postal code as the purchaser. As a result, a Hema webstore under the Core business plan could only barely make a profit, the sources said.
Franchises account for 40% of the more than 500 Hema stores in the Netherlands. There are relatively few stores abroad: only 70 in France and fewer than 10 each in Britain, Germany and Spain. Hema opened its first store in Austria this year and is readying four in Dubai.
The failure to divest Hema is a big blow to its owner Lion Capital which had agreed to sell Hema for about €1bn plus debt. This was the third time efforts to sell Hema had failed. This time, the parties were very close to completing the deal, insiders said.
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