Royal Ahold and Delhaize Group, the Dutch and Belgian grocers, plan to announce a merger agreement as early as Wednesday to create the fifth-biggest U.S. supermarket retailer, said a person familiar with the talks.
The all-stock merger would leave Ahold in control of about 60 per cent of the combined entity, said the person, asking not to be identified because the talks are private. Ahold chief executive officer Dick Boer would lead the merged company, while Delhaize CEO Frans Muller will stay on and help oversee the integration, which aims for about €500 million ($558 million) in annual synergies, the person said.
Zaandam, Netherlands-based Ahold said Tuesday it’s in the final stages of negotiation, though no definitive agreement has been reached, after Financieele Dagblad reported that a deal could be announced as early as this week as well as the CEO appointment. Bloomberg News reported on 2 June that the goal was to reach an agreement this month. The combination would be the biggest for the food retail industry in almost a decade.
After years of speculation, the potential deal has been hastened by increased competition in the U.S. from discount retailers including Wal-Mart Stores. Together, the European owners of the Stop & Shop and Food Lion chains have annual sales exceeding €54 billion and more than 4 per cent of the U.S. grocery market, according to Natixis research. The merged business would be Europe’s fourth-biggest food retailer, Natixis said.
Delhaize shares were suspended in Brussels Tuesday, after gaining 8.4 per cent, valuing the company at €9.11 billion. The stock earlier rose as much as 11 per cent. Ahold shares continued trading in Amsterdam until the close, rising 1.8 per cent, giving it a market value of €15.8 billion.
A Delhaize representative declined to comment and an Ahold spokesman declined to comment beyond the statement.
Bloomberg News, edited by ESM
