Ahold and Delhaize Knit Together in $28 Billion Merger
EUROPE - Just six weeks after whispers began circulating through the industry of merger talks restarting between The Delhaize group and Ahold, the contract has been drawn and the dotted line reportedly signed on a $28 billion merger.
Ahold Delhaize is now a worldwide retail group.
"This is a true merger of equals, combining two highly complementary businesses to create a world-leading food retailer,” Jan Hommen, Chairman of Ahold, and Mats Jansson, Chairman of Delhaize, said together in a press release. “The transaction delivers a compelling value proposition for our shareholders, a superior offering for our customers and attractive opportunities for our associates."
As we previously reported, the two retailers together have more than 6,500 stores, nearly 2,300 of which are in 14 states and the District of Columbia, according to both company websites.
"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,” Dick Boer, CEO of Ahold, said in the release. “With extraordinary reach, diverse products and formats, and great people, we are bringing together two world-class organizations 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."
Will this be the year’s largest retail merger? As we previously reported, 2014 was a "year of consolidation" with the recently merged Albertson’s/Safeway chain having turned a number of heads when it was made final in January, reporting final numbers at 2,230 stores, 27 distribution facilities and 19 manufacturing plants across 34 states and the District of Columbia.
Ahold Delhaize will account for almost 5 percent of the fragmented U.S. grocery market, according to market data firm Euromonitor, behind Wal-Mart, Kroger Co. and Albertson's/Safeway, a Reuters report stated.
The highlighted financial facts of the merger include:
- Run-rate synergies of €500 million (about $559.5 million) per year anticipated in the third year after completion.
- Aggregated net sales of €54.1 billion (about $60.5 billion), adjusted EBITDA of €3.5 billion (about $3.9 billion), net income from continued operations of €1.0 billion (about $559.5 billion) and free cash flow of €1.8 billion (about $2 billion) in 2014.
- €1 billion (about $1.1 billion) returned to Ahold shareholders by capital return and a reverse stock split prior to completion of the transaction due to ending its ongoing share buyback program.
- Ahold shareholders owning c. 61% of the combined company's equity.
- Delhaize shareholders owning c. 39% of the combined company's equity.
According to the release, the new key executive positions for Ahold Delhaize will include:
- Mats Jansson, Chairman of Delhaize Group, as Chairman.
- Jan Hommen, Chairman of Royal Ahold, and Jacques de Vaucleroy, Delhaize Group Director, as Vice Chairmen.
- Dick Boer, Chief Executive Officer of Royal Ahold, as Chief Executive Officer.
- Frans Muller, Chief Executive Officer of Delhaize Group, as Deputy Chief Executive Officer and Chief Integration Officer.
With six banners in the U.S. including Food Lion, Hannaford, Giant, Martin’s, Stop & Shop, and Ahold’s online grocery and delivery Peapod, concentrating mostly on the East Coast, it will be interesting to see what effect this has on the U.S. grocery chain.
