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European grocery giants announce US$29b merger

Published:Thursday | June 25, 2015 | 12:00 AM
A shopper heads into a Food Lion store in Richmond, Virginia., Wednesday, June 24, 2015. Dutch retailer Royal Ahold NV, which operates US supermarket chains Stop & Shop and Giant, has agreed to merge with its Belgian counterpart Delhaize Group. (AP Photo/Steve Helber)


Dutch retailer Royal Ahold NV, which operates supermarket chains Stop & Shop and Giant in the United States, has agreed to merge with its Belgian counterpart Delhaize Group, in a deal that creates a US$29 billion company that will serve over 50 million customers a week across the Atlantic.

The all-shares merger, which will lead to the formation of a single company called Ahold Delhaize with more than 6,500 stores, is expected to be completed in mid-2016, subject to regulators' and shareholder approval, the companies said Wednesday in a joint press release.

Based on the companies' market values on Wednesday, the new company would be worth about €26 billion (US$29 billion).

Delhaize, which owns supermarkets throughout Belgium, also operates the Hannaford and Food Lion stores in the eastern United States. As well as its US stores, Ahold owns the Albert Heijn chain of supermarkets, which has more than 850 stores in the Netherlands and 25 in Belgium.

"This is a true merger of equals, combining two highly complementary businesses to create a world-leading food retailer," Jan Hommen and Mats Jansson, the chairmen of Ahold and Delhaize, said.

Delhaize shareholders will receive 4.75 Ahold shares for each Delhaize share. Ahold shareholders will own around 61 per cent of the new company and Delhaize shareholders the rest.

The two retailers had combined sales last year of €54.1 billion (US$60.6 billion). They said that the deal will involve one-off costs of €350 million that will create annual savings of €500 million from the third year after the deal's completion.

Ahold chief executive officer Dick Boer will become CEO of the merged company, while Delhaize CEO Frans Muller will be his deputy.