Ikea sells key subsidiaries for 5.2b euros in major overhaul

Stockholm

THE Ikea Group said on Wednesday that it has sold key subsidiaries for 5.2 billion euros (S$7.9 billion) as part of an overhaul to help the furniture retailer react to new competition and shifts in consumer preferences away from its vast out-of-town stores.

The group, which operates most Ikea stores, sold subsidiaries that manage its supply chain and design, purchase and manufacture all Ikea furniture to Inter Ikea Holding BV, a company based in Delft in the Netherlands, which owns the Ikea brand.

The transaction, initiated by Inter Ikea, helped to boost pre-tax profits by 23 per cent to 5.4 billion euros at Ikea Group, which has its headquarters in Leiden in the Netherlands.

Since Sept 1, Inter Ikea has controlled the development of the Ikea range and supply chain. This relegates Ikea Group to being a pure retailer, operating under a franchise agreement with In…