Germany’s largest food retailer, Edeka Zentrale AG & Co, looks set to win control of the Kaiser’s supermarket business of German retailer Tengelmann after Edeka confirmed that the Federal Economics Minister Sigmar Gabriel intends to grant permission for Edeka’s acquisition of Kaiser’s.
Edeka said in a statement: “We are pleased that the Federal Economics Minister Sigmar Gabriel intends to grant permission for a takeover of Kaiser’s Tengelmann by EDEKA. This is a good day for the employees of Kaiser’s Tengelmann, who now have the prospect of a secure future under the umbrella of the EDEKA Group.
“It is as well a good day for Germany as a business location: The decision ensures 16,000 jobs, relieves pressure on social budgets and promotes the German Mittelstand (or SMEs) in family ownership.
“In the interests of all parties involved, we will approach the conditions as soon as possible and with the required diligence to pave the way for a transfer to EDEKA.”
Since October 2014, Tengelmann had sought to offload its Kaiser’s business to Edeka as Kaiser’s was too small to compete with Germany’s leading food retailers such as Aldi, Lidl, Metro’s Real hypermarkets, and Rewe. The deal was rejected by local competition authorities and has met with opposition from rival grocers, and German farmers’ association, Deutscher Bauernverband.
Tengelmann Group wanted to hand over its supermarket subsidiary, Kaiser’s (451 stores, 15,958 employees, EUR 1.8 billion net turnover), to the Edeka Group effective as of 30 June 2015.
In 2014, Edeka achieved with around 11,600 markets and 336,000 associates, sales of 47.2 billion euros, up 2% over the previous year. The Edeka group is structured along the lines of a co-operative and comprises 4,000 self-employed retailers, seven regional wholesalers, and the Edeka headquarters in Hamburg.
The sales rise was driven by its independent retailers, which now total 4000 and generated sales growth of 3.6%. Edeka also operates and owns the Netto discount grocery market stores.
According to Lebensmittel Zeitung, Alain Caparros, the chief executive of Rewe Group, criticised the decision by Germany’s Economics Minister to give the green light for Edeka to take over Tengelmann’s Kaiser’s operation.
Caparros said that a clear rejection of the proposed merger would have been a better option, and said that Rewe would carefully examine whether the proposals outlined by Minister Gabriel are admissible.
Rewe, along with other parties, has 14 days to present a formal opinion on the issue to the German Economics Ministry.