Swiss retail company Jelmoli is suing the Israeli consortium that broke off negotiations to buy its CHF3.4bn (£1.4bn) retail property portfolio and demanding it pay the entire headline price plus interest.


Israeli property companies Delek Global Real Estate, Delek Belron and Igal Ahouvi’s Blenheim Properties exchanged contracts to buy an 88-strong, retail-led property portfolio from Jelmoli in July this year.

Not in shareholders interest

However, after three weeks of price renegotiations in Zurich, prompted by the global credit crunch and a fall in property values, the partners walked away from the purchase last week, stating that to go ahead would not be in their shareholders’ interests.

A Jelmoli spokesman said yesterday it had: ‘commenced legal proceedings to enforce its right and solve the existing breach of the purchase agreement of July 31, 2007’.

Without basis

‘The purchaser consortium's withdrawal from the contract is without basis in the purchase agreement and is a blatant breach of contract. The purchasers' refusal to close marks an event of abuse that is unheard of in Switzerland. 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.’

It said it had taken legal advice from various jurisdictions.