Owner of Hungary’s flagship retail chain CBA sells remaining shares

Owner of Hungary’s flagship retail chain CBA sells remaining shares
The 76-year old businessman is selling his business
By bne IntelliNews May 23, 2018

The co-founder and owner of Hungary's flagship retail chain CBA, the fourth-largest in turnover, is selling his remaining share in the company, local media reported on May 22.

Laszlo Baldauf is seen as having close ties to ruling Fidesz, which has made great efforts to strengthen domestic ownership in the retail sector. PM Viktor Orban named retail as one of the four key strategic sectors of the economy, where local ownership should exceed 50%.

According to the sole national daily not controlled by the government, Nepszava, Baldauf had already started laying the groundwork for exiting his business last year. He sold operating rights of seven CBA stores to competitor Lidl. The sale did not get a positive response from circles of the cabinet. Government commissioner for trade policy said it was a "stab in the back."

Nepszava reported that the 76-year businessman is selling his remaining stake to six other CBA owners for HUF50mn each. The transaction needs to be approved by the company’s shareholdersʼ meeting.

Over the past eight years, Hungary's conservative right-wing government has introduced a string of measures to help domestic players gain market share against foreign-owned hypermarkets, including the levy of a “crisis tax” on the retail sector, which was struck down by the European Court of Justice. The ECJ also ruled a Hungarian regulation from 2014 that levied a progressive tax on turnover, clearly putting foreign-owned hypermarkets at a disadvantage, was discriminatory.

The main goal of introducing the Sunday shopping ban approved in final days of 2014 was to help smaller shops, but the regulation was abolished in April 2016, only after 13 months in effect, after opposition parties began a referendum drive on the issue and due to its vast unpopularity.

In the same year, Parliament approved legislation that would force retail chains to close if they fail to report a profit for two consecutive years on annual revenue of at least HUF15bn. The government implicitly targeted foreign retailers with the law accusing them of juggling with costs to avoid paying taxes.

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