Rami Levi Chain Stores Hashikma Marketing 2006 Ltd. (TASE: RMLI) confirmed today in a notification to the Tel Aviv Stock Exchange that it was in talks with international retailing companies, among them French companies Auchan and Casino, on bringing them into the Israeli market. This follows the franchise agreement between Yeinot Bitan, controlled by Electra Consumer Products, and French retailing giant Carrefour, and between Shufersal and Dutch company Spar.
If Rami Levi does sign an agreement with Auchan, this will probably not be a franchise agreement, but am agreement on a jointly owned company to be run by Rami Levi himself, or the introduction of Auchan products into Rami Levi’s 56 branches around Israel.
A strong card in Levi’s hand is the kashrut issue. For a huge company like Auchan, which has over 2,000 sales points in twelve countries, it might be more worthwhile to collaborate with Levi not only to sell its branded products in Israel, but also to import Rami Levi’s own-brand kosher products, rather than producing such products itself at high cost.
If an agreement is reached, Levi can expect to benefit from the same relaxations that the Ministry of the Economy granted to Electra Consumer Products when it brought in Carrefour. The ministry promised to be lenient with international retail chains that would enter the Israeli market subsequently.
Auchan, based in France, was founded in 1960. Its annual revenue runs at some €33 billion, and it employs over 160,000 people.
In its notification to the stock exchange, Rami Levy by mistake also mentioned Dutch company Spar as one with which it is conducting negotiations. Spar, which as mentioned has an agreement with Shufersal, issued a clarification, saying, "Spar is not conducting negotiations with Rami Levi, and the report is incorrect." A year ago, it was reported that Rami Levi was in talks with Spar, but these did not mature into an agreement.