Dutch supermarket group Ahold has confirmed that it has agreed to merge with Belgium’s Delhaize Group, after the two supermarket operators entered into preliminary discussions earlier in the year.
The newly merged entity, to be known as Ahold Delhaize, will serve more than 50m customers every week in the US and Europe. “The company will have enhanced scale across regions, market-leading retail offerings to serve customers’ changing needs, and a strong financial profile from which to fund innovation and investments in future growth,” the two companies said. “Ahold Delhaize will capitalise on the strong heritage and values of both companies, as well as complementary cultures, neighboring geographies, and the impact of combining successful sustainability programs,” they added.
As part of the deal – thought to be worth as much as $29m and expected to be finalised by the middle of next year – Ahold will terminate its ongoing share buyback program and return €1bn to Ahold shareholders via a capital return and reverse stock split prior to completion of Ahold and Delhaize’s transaction. At completion, Delhaize shareholders will receive 4.75 Ahold ordinary shares for each Delhaize ordinary share. Ahold shareholders will own approximately 61% of the combined company’s equity, while Delhaize shareholders will own roughly 39%.
Figures from Dutch banking group Rabobank suggest that any potential tie-up between Ahold and Delhaize could result in €1bn’s worth of annual savings, and create the fifth largest supermarket group in the world. The deal follows reports that the two retailers had entered preliminary discussions to merge in May, with the value of any potential transaction thought at the time to be worth around $25m, FoodBev reported.
In a joint statement, Delhaize chairman Mats Jansson and Ahold chairman Jan Hommen said: “This is a true merger of equals, combining two highly complementary businesses to create a world-leading food retailer. The transaction delivers a compelling value proposition for our shareholders, a superior offering for our customers and attractive opportunities for our associates.”
Delhaize CEO Frans Muller added: “We believe that the proposed merger of Ahold and Delhaize will create significant value for all our stakeholders. Supported by our talented and committed associates, Ahold Delhaize aims to increase relevance in its local communities by improving the value proposition for its customers through assortment innovation and merchandising, a better shopping experience both in stores and online, investments in value, and new store growth. We look forward to working closely with the Ahold team to implement a smooth integration process and realise the targeted synergies.”
And Ahold CEO Dick Boer said: “The proposed merger with Delhaize is an exciting opportunity to create an even stronger and more innovative retail leader for our customers, associates and shareholders worldwide. With extraordinary reach, diverse products and formats, and great people, we are bringing together two world-class organisations to deliver even more for the communities we serve. Our companies share common values, proud histories rooted in family entrepreneurship, and businesses that complement each other well. We look forward to working together to reach new levels of service and success.”
Delhaize’s Belgian turnover dropped by 2.4% to €1.18bn last quarter, while Ahold’s full-year revenue grew 1.8% to €11.7bn this year. Ahold’s operations in the Netherlands account for roughly 30% of its overall business, and it also has a presence in Belgium and the US. It is best known for its Albert Heijn chain of supermarkets.
© FoodBev Media Ltd 2024