The international furniture chain IKEA has canceled its plans to establish a new branch in Ashdod, following the decision of the Israeli franchisee to withdraw from an agreement to purchase a 110,000 square meter plot at the southern entrance to the city.
Ari Real Estate Company, controlled by the developer Tzachi Abu, reported today on the cancellation of the deal signed about a year and a half ago.
According to the original agreement, Bronfman Fisher Group and JTLV Fund were supposed to buy half of the shares of the company holding the land for 226 million shekels, with Ari Real Estate's share expected to amount to 113 million shekels.
The reasons for canceling the deal, according to representatives of the franchisees, stem from the tense security situation as well as bureaucratic delays. In particular, the delay in obtaining approval from the local planning and building committee was a crucial factor in the decision.
As a result of the cancellation of the deal, Ari Real Estate is expected to lose potential annual income of up to 120 million shekels. Additionally, the company will be required to refund the buyers an advance payment of 37.5 million shekels.
Despite the withdrawal from the agreement, Ari Real Estate announced that it will continue to seek a building permit and will negotiate with the Bronfman family to enter into a lease agreement for opening the furniture store.
The cancellation of the deal is a setback to the development plans of Ashdod and to the consumers in the area, who anticipated an accessible IKEA branch.