The culmination of 43 days of negotiations ended on June 24 when international supermarket retailers Ahold and Delhaize announced that they have agreed to combine their businesses as Ahold Delhaize. The merger is valued at $29 billion and would create a strong U.S. and European network of stores that would include 6,500 stores in total with approximately 2,000 supermarkets in the U.S. alone. The newly formed entity would employ about 375,000 associates and accrue revenue of about $60 billion annually (nearly $44 billion in U.S. sales), prior to any regulatory activity.
If the transaction is successfully completed, Ahold shareholders will own 61 percent of the combined company’s equity and Delhaize shareholders will own the rest.
Ahold Delhaize said they expect the merger to be completed in mid-2016.
There will also be a realignment of the management team. Dick Boer, current CEO of Royal Ahold, will become CEO of the newly formed company. Frans Muller, current CEO of Delhaize Group, will become deputy CEO and chief integration officer. Ahold’s Jeff Carr will become the CFO of the combined organization.
The current COOs of Ahold and Delhaize in the United States, James McCann and Kevin Holt, will stay on as COOs of their respective businesses. Pierre Bouchut, currently CFO of Delhaize, will become COO for Europe.
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. The company will be headquartered in the Netherlands, and will be governed by a two-tier board comprising a supervisory board and a management board. The Supervisory Board will consist of 14 members, comprising seven members from each of Ahold and Delhaize. The day-to-day management will be delegated to the executive committee.
“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,” Boer said in a statement. “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.”
Hommen and Jansson commented: “This is a true merger of equals, combining two highly complementary businesses to create a world-leading food retailer. The transaction delivers a compelling value proposition for our shareholders, a superior offering for our customers and attractive opportunities for our associates.”
Muller stated: “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.”
According to the announcement, the deal will take place through a cross-border legal merger of Delhaize into Ahold in which Delhaize shareholders will receive 4.75 Ahold ordinary shares for each Delhaize ordinary share.
Ahold Delhaize will be listed on the Amsterdam Stock Exchange and the Brussels Stock Exchange.
Additionally, Ahold will terminate its ongoing share buyback program; 1 billion euros ($1.12 billion) will be returned to Ahold shareholders via a capital return and a reverse stock split prior to completion of the transaction