The relationship between ICA AB and Royal Ahold -A study on international ownership

Abstract

Problem background: The 1990’s was a period of internationalisation within the retail sector. It was almost necessary to have a growth strategy with an international focus to be competitive on the retail market. The Swedish market-leading retail company ICA AB adapted to the increased internationalisation and developed an internationalisation strategy. In year 2000 the large Dutch international retail group Royal Ahold acquired 50 per cent of the shares in ICA AB. In connection with the transaction a shareholder agreement was established that was valid for 40 years and regulated the influence and control in ICA AB. In March of year 2013, Ahold divested its holdings in ICA AB to Hakon Invest, which is the financial organ within the ICA organisation. This lead to that ICA AB today is owned solely by Swedish shareholders. Problem discussion and objective: The objective of this thesis is to gain deeper knowledge in how two large companies within the retail industry corps with questions related to control and international partnership. This particular business deal evoked interest because of the interesting ownership structure, both within ICA AB and the relationship between ICA and Ahold. Deeper research into why Ahold became a part owner of ICA AB in year 2000, and why Ahold decided to sell the ICA ABshares in year 2013 is the foundation for the problem discussion in this thesis. Further investigations are made on how a business relationship like this originate and how and why is it terminated, and why a typical Swedish company decides to join partnership with a large foreign player. Method: Personal interviews have been conducted for the understanding of the problem discussion from the respondents’ perspective. Without the personal interviews the authors believe that it would not have been possible to reach the level of insight that was necessary for the quality of this thesis. Therefore a qualitative method was applied and part of the theoretical framework was developed after the interviews, which indicates that an inductive method was used to approach the objective. Observations: The observations are based on the four conducted interviews. The observations are divided according to a chronological order and important events to provide a pedagogic understanding of the content. Conclusion: Both companies had understandable motives to start the cooperation in year 2000 mainly due to the business environment at that time. The cooperation involved a change within the ICA organisation, mainly within the management but it was a notable fact for all parts of the organisation. The decision to end the relationship in year 2013 was mutual and a result of the new business strategy of Ahold in combination with ICA HF’s mission to secure the ICA-idea. Our conclusion is that this will benefit the ICA-idea and that the business areas that were not developed to its full potential during the time with Ahold now have the possibility to grow. An interesting question is how the listing of ICA Gruppen will affect the strategy of the company. Suggestions for further research: This thesis was written during the period of time directly after the buy-back of the shares of ICA AB. Therefore it would be interesting to investigate how the new ownership structure is going to affect the control over ICA AB and whether the recent transaction was beneficial or not for ICA AB. Since this thesis has a synoptically perspective it is possible to conduct deeper research into the ownership structure within ICA. Schuster (1989) examined the ownership relations within ICA from an agency theory in year 1989 but many structural changes have occurred since that period of time. Therefore it would be motivated to conduct a similar study, in particular after the most recent structural change.