International food retailers Delhaize Group (Delhaize) and Koninklijke Ahold N.V. (Ahold) announced they have entered into an agreement to merge. The combined company, which will be named Ahold Delhaize, will have a portfolio of strong, trusted local brands with over 375,000 associates serving more than 50 million customers every week in Europe and the US.
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.”
The transaction will create significant value, with anticipated run-rate synergies of EUR500 million per year to be fully realized in the third year after completion. Ahold and Delhaize businesses reported aggregated net sales of EUR54.1 billion, adjusted EBITDA of EUR3.5 billion, net income from continued operations of EUR1.0 billion and free cash flow of EUR1.8 billion in 2014.
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.”
Ahold shareholders will own c. 61% of the combined company’s equity and Delhaize shareholders will 9own c. 39% of the combined company’s equity. The transaction is expected to be completed mid-2016, following regulatory clearances, associated consultation procedures and shareholder approval.
Ahold operates supermarket chains such as Albert Heijn, Jeronimo Martins and Ahold in Europe and Stop&Shop in the US, while Delhaize owns Mega Image, Shop&Go, City AB, AB Cool Food, Food Lion and Hannaford, among others.