Axfood AB increases its stake in City Gross to 100 percent

Stockholm / SE. (axf) Sweden’s Axfood AB acquires the store chain City Gross, in which Axfood already possess joint control through its minority shareholding. The acquisition creates conditions to strengthen City Gross’ competitiveness and for growth in the hypermarket segment, which will challenge the market leaders and increase competition in this segment. The consideration amounts to SEK 2 billion.

Axfood AB has reached an agreement with Bergendahl Food Holding to acquire shares corresponding to 90.1 percent of City Gross Sverige AB, which entails that Axfood increases its shareholding in City Gross from the current 9.9 percent to 100 percent. Since 2021, Axfood has through its minority stake exercised joint control in City Gross and has a long-term cooperation agreement in for example logistics, assortment and purchasing, private labels, store safety, finance, HR and IT.

«We are very pleased to have reached this agreement with Bergendahls and welcomes all City Gross employees to the Axfood family. 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 work 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,» says Klas Balkow, President and CEO Axfood.

After a long period of stable profitable development, City Gross has, similar to many players on the market, had a somewhat weaker development during the recent period of high inflation. The business has also gone through large internal changes recently, including rearrangement of the assortment, new IT infrastructure, and in logistics. With Axfood’s knowledge and experience, conditions are created to further develop and strengthen City Gross’ concept and implement efficient operations throughout the entire chain. This will lead to strengthening of City Gross’ competitiveness in comparison to the large players in the hypermarket segment. Acquiring City Gross gives Axfood a more distinct market position in the hypermarket segment, thereby expanding the Group’s presence and reach.

«This deal creates the best conditions to strengthen City Gross competitiveness and its position on the market, to be able to expand going forward. Axfood is the right owner for City Gross in the future to develop the hypermarket concept over time,» says Lars Ljungälv, President and CEO Bergendahl+Son AB.

City Gross will be reported as a separate operating segment in Axfood’s financial reporting. The acquisition is expected to contribute positively to Axfood’s earnings per share by 2026 the latest.