Two European Grocery Chains Form Major US Stake

Ahold and Delhaize announced yesterday (June 24) their intention to merge by mid 2016.  “Ahold Delhaize” – which is its new name – will count more than 6,500 stores, 375,000 associates and 50 million customers per week in the U.S. and in Europe. With a combined turnover of more than €54.1 billion ($60.67 billion) the new group will be ranked fourth in the U.S. by market share, reports The Wall Street Journal.

The traditional brick-and-motor grocery stores are being disrupted by the growing number of online marketplaces offering online grocery delivery — which keeps many consumers out of the stores, and away from those tempting, high margin, impulse purchases.

“What has put traditional grocers in a challenging position is they’re being competed with at the fringes—at the high end and low end and online,” said Keith Anderson, vice president of strategy and insights for Profitero, a retail consultancy, to The Wall Street Journal. “It’s death by a thousand cuts.”

In this context, Ahold-Delhaize wants to accelerate innovation and improve the supermarkets’ formats and online platforms. The group will benefit from Ahold’s online experience with the buying, for instance, of bol.com in The Netherlands or its own mobile payment app called SCAN IT ! launched in the U.S. The Ahold-Delhaize merger “adds scale, allows us [to invest more] in innovation, and provides opportunities to develop our store formats in a highly competitive market,” said Ahold Chief Executive Dick Boer in an interview with The Wall Street Journal.

Delhaize shareholders will receive 4.75 Ahold ordinary shares for each Delhaize ordinary share. Ahold shareholders will own around 61 percent of the combined company’s equity and Delhaize shareholders will own about 39 percent of the combined company’s equity.

Mats Jansson, Chairman of Delhaize Group, will become Chairman of Ahold Delhaize. Jan Hommen, Chairman of Royal Ahold, and Jacques de Vaucleroy, Delhaize Group Director, will become Vice Chairmen of Ahold Delhaize.

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