Page 30 - October 2020

MARK FAITHFULL

Following

the Money

Mark Faithfull crunches the numbers as he looks at
analysis and expansion that reflects changing markets

INGKA COMES TO THE CITY END OF VAT SCHEME ANOTHER UK OWN GOAL?
ngka Centres says that it will transform the 6X6 building in downtown K retailers, hoteliers without a tax-free shopping
San Francisco into a new, circa 25,000sq m retail destination anchored and airport chiefs scheme for international
I by IKEA and complemented with mixed-use offerings “that are uniquely Uhave warned the UK visitors and the concern is
suited for San Franciscans and their lifestyle”, following its acquisition from MSP chancellor that scrapping tax- that without the perk a high
Property. The purchase is Ingka Centres’ first in the US and, with an acquisition free shopping for international spending group of travellers,
and redevelopment cost of $260M, 6X6 is expected to open in Autumn 2021. tourists could put 70,000 jobs who fly in from China and
It will be Ingka Centres’ second mixed-use project in a downtown location, in jeopardy. the Middle East, will go
following the company’s acquisition of Kings Mall in London’s Hammersmith The stark message comes after elsewhere. Paul Barnes, Chief
earlier this year. The company is evaluating opportunities across 40 major the Treasury said that the retail Executive of the Association of
cities worldwide and Gerard Groener, Ingka Centres’ General Manager, says: scheme, which enables non-EU International Retail, described
“Our urban projects are all about getting closer to our customers. 6X6 is an visitors to reclaim VAT paid on it as a devastating decision that
impressive six-floor glass building, with smart modern design and internal areas their purchases in the UK, would would lead to the loss of tens
that provide the ideal canvas to create something truly spectacular. We believe finish at the end of December of thousands of tourism and
Ingka Centres can transform the performance of well-located assets like 6X6 this year. The Treasury said it is retail jobs.
by aligning their offers to how people want to spend their time.” making use of the end of the “Madrid, Milan and Paris are
Brexit transition period to bring rubbing their hands with glee
personal duty and tax systems at this self-inflicted wound,” said
in line with international norms. Barnes. “If we charge a fifth more
However, the announcement for the same goods, international
has caused a huge storm in visitors will not hesitate to
retail and tourism circles with switch their city breaks to other
Marks & Spencer, Selfridges and countries and the stores and
the owners of designer outlet jobs will follow within months.”
mall Bicester Village among the The decision does seem baffling.
businesses putting their names London in particular already has
to a letter urging the chancellor a tough battle with cities such as
to think again, along with major Paris and Milan, especially as the
airports including Heathrow, UK is not part of the Shengen
Gatwick and Birmingham. visa system, which allows
The decision will leave Britain Chinese visitors to apply for a
as the only country in Europe single visa for EU countries.

NEW FRONTRUNNER IN BID FOR ASDA
hen Walmart bought Asda in 1999 it was to herald the beginning
of a new era for UK supermarkets. Asda – which had actually
W been modelled on Walmart – was set to shake up the British
grocery scene as Walmart continued to expand beyond its US powerbase.
Yet it didn’t quite work out like that. Walmart has already withdrawn
from a number of international markets and restarted talks on the
sale of a stake in its UK arm in July, 15 months after the collapse
of the planned merger with Sainsbury’s. The private-equity firm
Apollo Global Management is thought to have edged into the lead in
the £6.5bn bidding war after its rival Lone Star Funds dropped out.
It is believed that a third bid from private equity firm TDR Capital remains in
the running – the group is understood to have been working on a deal with the
billionaire Issa brothers, who are behind the British forecourts operator EG
Group. The brothers, who are also trying to buy Australia’s Caltex forecourts
group, are putting their own money into the Asda bid rather than bidding via EG.
However, the TDR-backed deal is likely to prove less attractive to Walmart,
as it could lead to attention from competition regulators and potentially a
lengthy inquiry. Regulators blocked Walmart’s earlier attempt to exit the UK by
merging Asda with Sainsbury’s and it is unlikely to want to repeat the process.
Apollo, which is working with the retail veteran Rob Templeman, the former
boss of department store chain Debenhams, is thought to be planning a
more straightforward deal based on expanding Asda’s online presence.
Walmart, which bought Asda in 1999, is expected to retain a minority stake
in the supermarket as part of the deal.
50 RETAIL & LEISURE INTERNATIONAL NOVEMBER 2018