Ahold to acquire Delhaize; would form 6th largest US food retailer
- Dutch grocery retailer Ahold, which operates Stop&Shop and Giant stores in the U.S., has announced it will acquire Delhaize Group, operator of the Food Lion and Hannaford chains, creating the sixth-largest food retailer in the U.S. This merger is the culmination of years of discussion between the two entities.
- "In a joint statement, the two companies said Ahold would have a 61 percent stake in the merged entity, which will have 54.1 billion euros ($60.6 billion) in sales, more than 6,500 stores worldwide and complementary operations in the United States and Benelux," according to Reuters.
- Per the deal, Ahold said it would pay 4.75 shares for every Delhaize share, which brings the total perceived value for Delhaize to about $10.4 billion. Ahold will also "return 1 billion euros to its shareholders with a special dividend and reverse stock split prior to the merger," Reuters reported. The companies anticipate the deal closing mid-2016.
Where this acquisition comes into play in the U.S. is in terms of the supply chain integration between the two companies. On the U.S. east coast, where both companies see about two-thirds of their sales, much overlapping exists in terms of distribution centers, so some of these will likely be eliminated following completion of the acquisition.
While this may mean cost savings for the combined companies, it could spell trouble for East Coast residents. The shutdown of distribution centers would likely mean job losses for the two companies, both on the floor and in management, unless production is increased at other facilities and employees are moved there.
Ahold CEO Dick Boer — who would be CEO of the combined company — does not anticipate any regulatory concerns . "We're really complementary to each other in most of our markets, that's the uniqueness of this merger," Boer said.
In the past year, Delhaize sold off 154 stores to Bi-Lo, and its supermarket chain Bottom Dollar Food closed all 66 of its stores. Also, in its Q4 2014 earnings report, Delhaize reported a net loss of 55 million euros ($61M), well below Q4 2013's net income of 104 million euros. Ahold reported a 0.5% drop in operating income to $425 million in its earnings report last month.