FDBusiness.com

Leading international food retailers Delhaize Group and Royal Ahold have agreed to merge. The combined company, which will be named Ahold Delhaize, will have a portfolio of strong, trusted local brands with more than 375,000 associates serving more than 50 million customers every week in the United States and Europe. The company will have enhanced scale across regions, market-leading retail offerings to serve customers’ changing needs, and a strong financial profile from which to fund innovation and investments in future growth. Ahold Delhaize 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 transaction will create significant value, with anticipated run-rate synergies of €500 million per year to be fully realized in the third year after completion. Both companies are highly cash generative which will allow Ahold Delhaize to invest in future growth and deliver attractive returns to shareholders.

Ahold and Delhaize businesses reported aggregated net sales of €54.1 billion, adjusted EBITDA of €3.5 billion, net income from continued operations of €1.0 billion and free cash flow of €1.8 billion in 2014.

Dick Boer, Chief Executive Officer of Royal Ahold, will become Chief Executive Officer. Frans Muller, Chief Executive Officer of Delhaize Group, will become Deputy Chief Executive Officer and Chief Integration Officer.

Frans Muller says: “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.”

At completion, Delhaize shareholders will own about 61% of the combined company’s equity and Delhaize shareholders will own about 39%.  The transaction is expected to be completed mid-2016, following regulatory clearances, associated consultation procedures and shareholder approval

CAPTION:

Frans Muller, Chief Executive Officer of Delhaize Group, and Dick Boer, Chief Executive Officer of Royal Ahold.