Jelmoli to sue Delek group over collapse of EUR 2bn sale

Jelmoli Holding is launching legal proceedings against the Israeli consortium that pulled out of the EUR 2 bn deal to buy a portfolio of 88 properties from the Swiss retail and property group. In a statement, Jelmoli said it is suing Blenheim Properties, Delek Global Real Estate and Delek Belron International to obtain the agreed price and interest.

Jelmoli described the consortium's withdrawal from the deal as a 'blatant breach of contract' and an 'event of abuse that is unheard of in Switzerland'.

The CHF 3.4 bn (EUR 2 bn) transaction was first announced on 31 July, shortly before the subprime mortgage crisis in the US began to affect the global financial markets. The consortium subsequently tried to get Jelmoli to accept a price cut as the credit markets dried up. When this failed, Delek Global Real Estate and its partners pulled out of the deal.

'The purchasers argue that there are new conditions in the international credit markets; the purchase agreement does not, however, provide for purchasers' right to withdraw under such circumstances,' Jelmoli said.

'Based on legal advice from various jurisdictions, Jelmoli Holding has instructed its lawyers to commence legal proceedings against the purchaser consortium. The preparations will be completed shortly,' the company added.