Will Hema struggle to get sold?

Will Hema struggle to get sold?
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Dutch department store chain Hema, on sale since September, is not attracting much attention, because interested parties feel it is overpriced. Previous attempts to sell the company have also failed. 


Two candidates to second round

In September 2017, owner Lion Capital put Hema up for sale for the third time, after two failed attempts in 2011 and 2014. It is also a rather bothersome process this time around, according to the Financieele Dagblad’s insider information.

Apparently, there are still two interested parties: British Clayton Dubilier & Rice and a group of Dutch investment groups (Gilde and Alpinvest) headed to the second round at the start of the year, according to the business paper. The asking price, allegedly between 1 and 1.3 billion euro, is too high for the potential buyers.

Hema already invests a lot in further expansion, particularly abroad, with a new international store formula and smaller stores in convenience locations like airports and train stations. In the past year, the retailer invested 12 million euro in the Benelux alone in that regard.


Question about its potential

Nevertheless, there are questions about Hema’s potential, after it had suffered losses for years. It did manage to generate a profit in the third quarter of 2017. The department store chain still has a lot of debt, which is because Lion Capital funded its Hema purchase with expensive loans, according to FD. Hema apparently only has a limited amount of real estate.

Increase competition is also a major issue: Hema is increasingly stuck between popular non-food discount chains (from the bottom of the market) and luxury department store chains (at the top end of the market). That does not even include online competition.