”Globes” has learned that IKEA International is delaying the transfer of part of its investments in IKEA Israel until the expected decision on the expiration of Co-Op Blue Square Consumer Cooperative Society (Co-Op)’s franchise in a few weeks. To date, IKEA, which holds 25% of the company, has not transferred its $4 million share of the investment.
$15 million has been invested in IKEA Israel so far, and Co-Op has invested the lion's share of the sum. IKEA committed itself to financing the $1 million cost of the catalogue and half the estimated $2.5 million advertising budget.
Assessments are that the main candidate for the IKEA Israel franchise after IKEA buys out Co-Op’s share in the local partnership is Benjamin Gaon, owner of Gaon Holdings, whose retail arm is Gaon Retail Chains. Gaon declined to comment on the report.
As Co-Op chairman, Gaon was instrumental in obtaining IKEA’s Israeli franchise. IKEA threatened to take away Co-Op’s IKEA franchise two years ago, after promises to set up the first store in Yakum were not fulfilled.
Gaon managed IKEA, while transferring the IKEA Israel holdings from Blue Square Israel to Co-Op. He made a commitment to the heads of IKEA to open the first store in February 2001.
As an alternative to the Yakum site, Gaon made an agreement with Netanya Mayor Miriam Feierberg to set up a store on a 50-dunam (12.5-acre) site in the Ramat Poleg industrial zone. The deal was concluded, and was made contingent on the store being open on Saturday. That condition was later retracted, owing to pressure from haredi (ultra-Orthodox) Jews. The parties took advantage of Gaon’s withdrawal from Co-Op to ignore this condition, a situation that did not please IKEA International.
As published in “Globes” last week, IKEA International intends to buy out Co-Op’s share of the partnership in Israel. The main reason is the announcement by Co-Op’s appointed committee that it intends to sell Co-Op’s assets.
Published by Israel's Business Arena on April 9, 2001