Relations between the owners of Jumbo and Sligro were already bad, but in the meantime they will be miserable. In 2018, supermarket chain Jumbo together with Coop took over the Emté supermarkets of the Sligro Food Group for an amount of 410 million euros. After the takeover, tempers ran so high that a lawsuit was reached. And now there is a verdict in the proceedings on the merits: Sligro has won, the court in Amsterdam has ruled.
The lawsuit revolved around the question of whether Sligro had overstated Emté’s results before the acquisition, in order to obtain a higher price for the stores. The judge thinks not. And so the catering wholesaler Jumbo and Coop do not have to repay 83 million euros, as they had demanded.
Back to the beginning for a moment.
There has always been a rivalry between Sligro and Jumbo, who both happen to be located in Veghel in North Brabant. As the crow flies, they are even right next to each other, there is only a canal between them. For years, the two family businesses were about equally successful. They are also about the same age: Jumbo dates from 1921, Sligro from 1935.
The relationship between the Van Eerd family of Jumbo and the Slippens family of Sligro deteriorated after 2011. In that year they both tried to take over supermarket chain C1000. Jumbo made the winning offer of 900 million euros and was able to buy C1000 from investment company CVC.
Sligro got it wrong. In the years that followed, Jumbo grew into the undisputed number two in the supermarket world. Last year turnover amounted to 9.7 billion euros. Sligro’s turnover, on the other hand, has continued to fluctuate at the same level over the past ten years. In 2010, the turnover amounted to 2.3 billion euros – including Emté. Last year it was 1.9 billion.
Complain about the results
The fact that the Slippens family wanted to sell the Emté stores to the yellow competitor at all led to some surprise in the industry in 2018. It mainly showed how bad things were going for Emté. Supermarket sales had been declining for years and analysts had repeatedly pointed out that it would be better for Sligro to continue with wholesale activities alone.
Also read: Now the families from Veghel have concluded a deal (2018)
Soon after Jumbo and Coop took over Emté (Jumbo got 79 supermarkets, Coop the rest), they started to complain about the results of the stores. The stores were in much worse shape than they had estimated, said Ton van Veen, Jumbo’s financial chief, in April 2019 in the newspaper. FD in an explanation of the annual figures for 2018. All in all, he was happy with the new supermarkets, because turnover increased by an average of 15 percent after they were converted into Jumbos “over time”. But still: the turnover and margins disappointed him.
Jumbo and Coop later argued this in court. The gross profit margin of the Emté stores turned out not to be 24.3 percent, as they believed to have been shown by Sligro’s figures, but around 20 percent. According to the buyers, Emté was ‘de facto loss-making’, while Sligro had suggested that it ‘was a profitable business’.
The difference in margin could be explained by purchasing benefits that Sligro had allocated too much to Emté in the eyes of Jumbo and Coop. As a result, the supermarkets would have appeared more profitable than they actually were. Sligro countered that all sales figures had been audited by an accountant.
The court finds that Jumbo and Coop cannot sufficiently substantiate their allegations and emphasizes that ‘not out of sight’ [kan] be lost that the reason for Sligro to sell Emté was that it was not satisfied with the performance of the supermarkets”. It was known, says the judge, that Emté was the ‘significantly less strong brand’ within Sligro Food Group. The judge also finds it logical that the synergy benefits that Emté owed to the collaboration with the wholesalers would disappear once the supermarkets were no longer covered by Sligro.
Next steps
Sligro is of course happy with the verdict. A spokesperson said the ruling is “simple and clear” – “exactly what we expected the ruling to be”.
Jumbo and Coop deeply regret the judge’s ruling, the companies write in a joint statement. According to them, there are clear indications that Sligro has given an ‘incorrect representation’ about Emté’s financial position, ‘but apparently we have not been able to prove that sufficiently in court’.
Jumbo and Coop are considering possible next steps.
A version of this article also appeared in NRC in the morning of November 12, 2021
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