Belgian retailer Delhaize today confirmed that it has reached a binding agreement to sell its 49 per cent shareholding in the Singapore food retailer, Shop N Save, to Singapore retailer Cold Storage Singapore for SGD 44.1 million (€21.9 million).
Under the same agreement QAF will also sell its 51 per cent stake in Shop N Save to Cold Storage Singapore, which is part of the Hong Kong-based dairy group, Dairy Farm. In the fourth quarter of 2003, the sale will result in an estimated capital gain for Delhaize Group of €10 million with the final closing of the deal expected to take place in the coming days.
Shop N Save is the third largest food retailer in Singapore. At the end of September 2003, the retailer operated 35 stores. In 2002, Shop N Save generated sales of SGD 237.5 million (€140.4 million) and employed 1,157 associates at year-end.
Delhaize group acquired its 49 per cent shareholding in Shop N Save in January 1999 from QAF, a Singaporean listed company. QAF retained the remaining 51 per cent stake in Shop N Save.
Jean-Claude Coppieters, executive vice president of Delhaize and in charge of the Asian operations of the Group, commented: "We have been pleased with our partnership in Singapore and with the progress of our banner there. The attractive purchase proposal from Dairy Farm allows Delhaize to generate additional cash and to refocus on our two original Asian ventures in Thailand and Indonesia. Because of their strong position in the marketplace, Dairy Farm is well-positioned to continue Shop N Save's successful development.''
In recent months there has been much speculation over whether or not the sale of the group's Singapore division would take place or not. Rumours have mounted due to continuing debts from the group's US operations, which have weighed heavily on the overall results. In response the chain has been off-loading a number of its under-performing US operations in the course of the last year.
The Singapore operations have not been the most successful of its Asian ventures, with operating losses running at around €3 million for the first half of this financial year. Now that the deal has been signed over the Singapore operations, the focus will switch to Delhaize's other two Asian operations - Food Lion in Thailand and Super Indo in Indonesia. Although both the operations have proved to be profitable in local currency terms, many analysts believe that the company will have more to gain by selling off the whole of its Asian division.
Delhaize group is a Belgian food retailer present in ten countries on three continents. At the end of the third quarter of 2003, the company's sales network consisted of 2,522 stores. In 2002, Delhaize posted €20.7 billion in sales and €178.3 million in net earnings.