Ahold And Delhaize Agree On Merger

Koninklijke Ahold N.V. and the Delhaize Group announced that they are moving on their "merger of equals" initiative to create a company with more than 6,500 stores globally, including a large number in the eastern United States. The resulting combination, Ahold Delhaize, will serve over 50 million customers per week in the United States and Europe.

Reports value the merger deal at $28 billion, with Ahold taking a 61% stake in the new company.

Mats Jansson, Delhaize Group chairman, will become chairman of Ahold Delhaize. Jan Hommen, chairman of Royal Ahold, and Jacques de Vaucleroy, Delhaize group director, will become vice chairmen of the combined company.

Dick Boer, CEO of the Royal Ahold business, will take the same title in the combined company. Frans Muller, Delhaize Group CEO, will become deputy CEO and chief integration officer of the new entity.

The companies, which combined should generate about €54 billion, or about $60 billion, in sales, asserted that the transaction will create significant value, with anticipated run-rate synergies of €500 million, or almost $600 million, per year to be fully realized in the third year after merger completion. They added that both companies are highly cash generative, which should allow Ahold Delhaize to invest in future growth and deliver attractive shareholder returns.

At the end of March, the Belgium-based Delhaize Group operated 3,410 stores globally. In 2014, Delhaize Group posted $29.4 billion in revenues. In the United States, it operates the Food Lion and Hannaford supermarket chains totaling just over 1,300 stores.

Netherlands-based Ahold posted sales of about $36.9 billion in 2014. It operates 3,026 stores worldwide including, in the U.S., Stop & Shop, Giant Food, Giant Food Stores, Martin’s Food Markets, and online grocer Peapod. Its U.S. operation includes 770 stores and 210 product pick-up points.