The transaction includes three full-size IKEA stores in Riga, Vilnius and Tallinn, five small customer service locations in the Baltic States, as well as an e-commerce and digital retail development company.
The company did not disclose the amount of the transaction.
The head of IKEA in Latvia, Pēteris Grīnbergs, said in an interview to the LETA agency that the change of owner will not change anything in the internal structure of the company and the company will continue the previously planned development model.
On the other hand, Deniss Balslevs, head of the sales concept of “Inter IKEA Group”, stated in an interview with LETA agency that it was important for “Inter IKEA Group” not to change the current management structure, as it has worked successfully for several years, but there will be changes in the board.
“Only the composition of the board will change in the company. A new board will be appointed to support the current management of the company,” he said.
Also, Balslev pointed out that for many years Inter IKEA Group owned only one store in Delft, the Netherlands, while all other IKEA retail stores are under the control of IKEA franchisees, but the company thought it would be good to one day become more involved in countries with full multi-channel sales business, understanding what is happening all over the country, not just in the Delft store.
“Then such an opportunity arose, because one of the franchisees announced that there was a generational change in the company, a dialogue began and then we thought that it was a fantastic opportunity,” said Balslevs, talking about why the decision was made to buy IKEA’s retail businesses in the Baltic States.
Asked if this also means that Inter IKEA Group could also buy other stores from companies that currently work with IKEA franchises, Balslev answered in the affirmative, while emphasizing that Inter IKEA Group could buy not individual stores, but all stores in the respective country, however, the company does not currently have such plans.
“I don’t think we will buy individual stores. Then it would be a nationwide operation that we would take over, but to be honest, it’s not like we have anything planned right now. This is the first time we do something so big, and now we have learned a lot,” said Balslev.
At the same time, he also added that if the franchisee wants to sell the business, he cannot do so without cooperation with Inter IKEA Group as franchise holders.
On the other hand, when asked about the value of the transaction, Balslev stated that it is confidential.
“It’s been a long process to understand the real value of buying IKEA with three big stores, with five customer service points, with an online business and with a brand. Of course, we own the brand, but the brand also has value here in the Baltics. So it’s been a long journey to arrive at a price as fair as possible, and we’ve fully agreed on that with the seller,” said Balslev.
He also said that the approval of the competition supervisors for the transaction was expected since August, including the approval not only of the Baltic states, but also of the European Union regulator.
On the other hand, Grīnbergs indicated that the manager of the store will continue to be SIA “Paul Mason Properties” in Latvia.
“Yes, Paul Mason Properties is staying because we don’t want to overcomplicate things. This would only mean that many local partners and contracts would have to transfer to the new company. Therefore, everything remains as before,” he said, adding that the legal structure will also remain unchanged in Estonia and Lithuania.
“Firmas.lv” information shows that “FE Baltic”, registered in the Netherlands, became the sole owner of “IKEA” manager “Paul Mason Properties” in Latvia and real estate manager SIA “Verus Praedium” this December.
The company states that the acquisition transaction was carried out by the Dutch “Inter IKEA Retail Holding”, which is a subsidiary of the Dutch “Inter IKEA Systems”.
Inter IKEA Systems is an IKEA franchisor and owner of the IKEA brand. Inter IKEA Group also includes IKEA of Sweden, IKEA Supply AG and other related companies.
“Inter IKEA Holding” ir “Inter IKEA Group” holdingkompānija.
The company explains that “IKEA” retail companies in the Baltic countries will continue to operate using the franchise system, but the franchisor will be “Inter IKEA Systems”, which is part of the “Inter IKEA Group”.
Inter IKEA Group also owns the IKEA store in Delft, the Netherlands, while all other IKEA retail markets are managed by 12 IKEA franchisees.
The company also mentions that in August 2024 “Inter IKEA Group” signed a share purchase agreement with “Hof ehf”, owner of “IKEA” Baltic retail companies.
After receiving the necessary regulatory approvals, this transaction has been completed. On the other hand, Hof ehf will continue to manage the IKEA retail company in Iceland.
“Inter IKEA Group” CEO Jūns Ábrahamsons-Rings notes that the acquisition of “IKEA” retail businesses in the Baltic States will help the company to further develop the company’s concept and strengthen the franchise system.
“Over the course of twelve years, we have expanded in the markets and currently we have eight customer service locations under our control and a ninth one is being prepared – an “IKEA” small store. The acquisition will open up even more new opportunities for us to strengthen the brand and concept, as well as further promote joint growth and provide added value to customers in the Baltic countries,” says Inga Filipova, IKEA’s retail manager in the Baltic countries.
It has already been reported that Paul Mason Properties, the manager of IKEA in Latvia, in the last financial year, which lasted from September 1, 2022 to August 31, 2023, worked with a turnover of EUR 93.566 million, which is 14.1% less than the year before, while the company’s profit decreased twice – to 8.656 million euros.
“Paul Mason Properties” was registered in Latvia in 2015, and its share capital is 20,000 euros.
In the Baltic States, the first “IKEA” store was opened in Lithuania – in 2013 it was opened in Vilnius. The “IKEA” store in Riga was opened on August 30, 2018, and the “IKEA” store in Tallinn, the capital of Estonia, was opened at the end of August 2022.
The company “IKEA” was established in 1943.
IKEA’s Expansion in the Baltics: A Conversation with Retail Expert Dr. Janis Krumins
Table of Contents
IKEA’s recent acquisition of retail operations in the Baltic states marks a significant step in the company’s European expansion. We delve into this advancement with retail industry expert Dr. Janis Krumins, exploring the strategic implications, market dynamics and potential future impact on both IKEA and the Baltic marketplace.
Drivers Behind the Acquisition:
Senior Editor, world-today-news.com: Dr. Krumins, can you shed some light on what might have motivated IKEA to take full ownership of its retail operations in the Baltics?
Dr. Janis Krumins: certainly. IKEA’s decision aligns with an apparent shift in their global strategy. Traditionally, thay’ve relied heavily on franchise agreements, while this acquisition signifies a move towards more direct control in key markets.
The Baltic region demonstrates strong growth potential for IKEA, with rising consumer spending and increasing demand for home furnishings.Owning the operations allows them tighter control over branding, customer experience, and possibly, supply chains.
The Future of IKEA in the Baltic states
Senior Editor: How do you anticipate this acquisition will impact IKEA’s presence and operation in Estonia, Latvia, and Lithuania?
Dr. Janis Krumins:
This move likely signals IKEA’s commitment to invest further in the region. We coudl see expansions in existing stores, potentially new store openings, and further development of their online and omnichannel offerings to cater to Baltic consumers.
Maintaining the current management team, as noted in official statements, is a smart move for continuity and minimizing disruption while ensuring local market knowledge is retained.
potential Market Implications
senior Editor: What broader effects might this acquisition have on the retail landscape in the Baltics?
Dr.Janis Krumins: This acquisition significantly strengthens IKEA’s position, potentially impacting competitors in the home furnishings sector. They might need to become more agile and responsive to changing customer expectations and competitive pressures.
Another captivating aspect to observe is how IKEA leverages their scale and resources to potentially offer more competitive pricing, impacting the affordability of home furnishings for baltic consumers.
