Economy
Multinationals picking up parts of Hungarian billionaire CBA owner's empire
Three CBA stores are soon to be opened under the Spar flag, which signals that László Baldauf continues to back out of his network, Portfolio has learned. The billionaire founder of the CBA network started his withdrawal from this business last year. Although he is all for the strengthening of domestically-owned companies, he sold the operating rights of his stores to Lidl and now he is selling them to Spar. We have learned that several CBA executives are looking at “exit strategies" but CBA has denied that.
László Baldauf, the founder and honorary president of retail chain CBA, has transferred the right to operate several CBA stores, Portfolio has learned. He is parting with units in Erdőkertes, Andrássy road in Budapest and a third store also in the capital city. These will soon open as Spar stores.
Baldauf is systematically “shutting down" his CBA units. German rival Lidl took over the operating rights of seven CBA stores from Baldauf last December.
At first Baldauf has denied what we had learned, but it turned out that Lidl did actually obtained the right to operate CBA stores, including those at Ferenciek square and Rákóczi road in Budapest.
We have contacted Spar inquiring about the current transaction and got the response that “of course, as in the past, we do not oppose to another acquisition in the present, either if an opportunity opens up since we are committed to Hungarian customers for the long run."
We reported in December 2017 that after Lidl, Baldauf was in talks with Spar over selling CBA stores, but as parliamentary election on 8 April was approaching, he shelved the project for a while.
Attila Fodor, communications director of CBA Kereskedelmi Ltd., replied this to Portfolio’s inquiry: “László Baldauf made it clear in a statement at the end of last year that he is withdrawing from everyday business life and will be letting out all of his stores. Negotiations in this regard are conducted continuously, but he does not wish to provide further information about the outcome of these in the future."
In an another interview, the businessman said he would settle everything with his business partners at the end of 2018, and will resign his position as honorary president. His decision to transfer the right to operate his stores “was motivated by economic considerations and professional insight, and personal reasons also played a role." Oddly enough, he also noted that local businesses need to be supported instead of multinational enterprises.
According to Trade Magazine, there were 2,289 CBA stores in Hungary in 2014, one year later there were 2,267 and 2,177 in 2016.
We have reported earlier that CBA Supervisory Board Chairman Zoltán Dienes was letting out a Príma store at Újhegy Shopping Yard to Auchan, while Fodor told Portfolio it was a standalone deal, nothing more. It is a characteristic of the franchise system that members buy and sell stores all the time, as they are aiming for an economic operation, he added.
The government likely still wants more than 50% of the local retail sector to be owned by Hungarians. It would not be much of a surprise if - now that Prime Minister Viktor Orbán’s Fidesz party has secured itself two-thirds legislative majority in last Sunday’s election - the government were trying to devise legislation that benefits Hungarian companies at the expense of multinationals.
Front page photo by MTI Fotó: Attila Kovács
László Baldauf, the founder and honorary president of retail chain CBA, has transferred the right to operate several CBA stores, Portfolio has learned. He is parting with units in Erdőkertes, Andrássy road in Budapest and a third store also in the capital city. These will soon open as Spar stores.
Baldauf is systematically “shutting down" his CBA units. German rival Lidl took over the operating rights of seven CBA stores from Baldauf last December.
At first Baldauf has denied what we had learned, but it turned out that Lidl did actually obtained the right to operate CBA stores, including those at Ferenciek square and Rákóczi road in Budapest.
We have contacted Spar inquiring about the current transaction and got the response that “of course, as in the past, we do not oppose to another acquisition in the present, either if an opportunity opens up since we are committed to Hungarian customers for the long run."
Spar Hungary will continue investing in 2018 by building new stores, thus creating new jobs, and by renewing its existing units. This year’s refurbishment budget exceeds 23 billion forints, which are to be invested in Hungary by the family-owned Austrian company. In scope of this project, nearly 20 stores could be reconstructed and several new stores could be delivered
, Spar said.We reported in December 2017 that after Lidl, Baldauf was in talks with Spar over selling CBA stores, but as parliamentary election on 8 April was approaching, he shelved the project for a while.
Attila Fodor, communications director of CBA Kereskedelmi Ltd., replied this to Portfolio’s inquiry: “László Baldauf made it clear in a statement at the end of last year that he is withdrawing from everyday business life and will be letting out all of his stores. Negotiations in this regard are conducted continuously, but he does not wish to provide further information about the outcome of these in the future."
In an another interview, the businessman said he would settle everything with his business partners at the end of 2018, and will resign his position as honorary president. His decision to transfer the right to operate his stores “was motivated by economic considerations and professional insight, and personal reasons also played a role." Oddly enough, he also noted that local businesses need to be supported instead of multinational enterprises.
In light of this, it is particularly interesting that one after another his stores are ending up in the hands of multinational companies. On the other hand, this is no surprise considering that these companies are the ones really carrying a punch, with real capital power in the retail sector. The largest Hungarian retail chain COOP decided at the end of January that it would keep some if its stores closed on Mondays to compensate for the labour shortage and the hike to the minimum wage.
The number of retail stores in Hungary has been decreasing for years. According to Central Statistical Office (KSH) data, the number of stores was rising from 2010 until the end of 2012, but since 2013 the number has been dropping persistently. This likely has to do with several factors, including the establishment of national tobacco shops, the introduction of online cash registers and the Sunday shopping ban introduced in March 2015 and in place for nearly a year. Since then, experts say, stores which are not famous for efficient work organisation and high productivity have not been able to cope with the massive raise to the minimum wage and the guaranteed wage minimum for skilled workers. This has only worsened their profit margins and outlook further.We have also learned that since Baldauf started his systematic moves, several CBA owners have been trying to figure out an exit under the best possible terms.
At the same time, Attila Fodor said information that several other owners of CBA were planning to sell their units was untrue. “The network is developing. The opening of our newest Príma stores will be this week on Thursday in Nyírbátor," the communications director said.According to Trade Magazine, there were 2,289 CBA stores in Hungary in 2014, one year later there were 2,267 and 2,177 in 2016.
We have reported earlier that CBA Supervisory Board Chairman Zoltán Dienes was letting out a Príma store at Újhegy Shopping Yard to Auchan, while Fodor told Portfolio it was a standalone deal, nothing more. It is a characteristic of the franchise system that members buy and sell stores all the time, as they are aiming for an economic operation, he added.
The government likely still wants more than 50% of the local retail sector to be owned by Hungarians. It would not be much of a surprise if - now that Prime Minister Viktor Orbán’s Fidesz party has secured itself two-thirds legislative majority in last Sunday’s election - the government were trying to devise legislation that benefits Hungarian companies at the expense of multinationals.
Front page photo by MTI Fotó: Attila Kovács
