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It's official: Ahold and Delhaize have signed off on a deal to combine their businesses through what the parties describe as "a merger of equals."
The new entity, Ahold Delhaize, will create one of the largest supermarket conglomerates operating in the U.S.create a base of more than 6,500 stores with 375,000 associates, which will be poised to serve roughly 50 million customers per week in the United States and in Europe.The transaction between the international retailer conglomerates, which is valued at $10.4 billion, is expected to be completed mid-2016, following customary regulatory clearances and shareholder approval.
The all-stock deal will capitalize on the strong heritage and values of both companies, as well as complementary cultures, neighboring geographies, and the impact of combining successful sustainability programs.
The new leadership structure includes:
- Mats Jansson, chairman of Delhaize Group = Ahold Delhaize chairman
- Jan Hommen, chairman of Royal Ahold, and Jacques de Vaucleroy, Delhaize group director = vice chairmen
- Dick Boer, CEO of Royal Ahold = CEO
- Frans Muller, Delhaize Group CEO = simultaneous roles as deputy chief executive officer and chief integration officer
- Current chief operating officers of Delhaize America and Ahold USA, Kevin Holt and James McCann, respectively, will remain in place
The transaction will deliver anticipated run-rate synergies of €500 million per year to be fully realized in the third year after completion; Ahold and Delhaize reported aggregated net sales of €54.1 billion (US $60.5 billion), adjusted EBITDA of €3.5 billion (US $3.9 billion), net income from continued operations of €1 billion (US $1.12 billion) and free cash flow of €1.8 billion (US $2 billion) in 2014.
Ahold will terminate its ongoing share buyback program; €1 billion (US $1.12 billion) will be returned to Ahold shareholders via a capital return and a reverse stock split prior to completion of the transaction.
At completion, Delhaize shareholders will receive 4.75 Ahold ordinary shares for each Delhaize ordinary share. Ahold shareholders will own 61 percent of the combined company's equity and Delhaize shareholders will own 39 percent of the combined company's equity.
Jan Hommen, Chairman of Ahold, and Mats Jansson, Chairman of Delhaize, 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."
Frans Muller, CEO of Delhaize, said: "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 realize the targeted synergies."
Dick Boer, CEO of Ahold, 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 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."
Editor's Note: This is a developing story. Check back with Progressive Grocer for ongoing updates.