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 units 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.”
In the follow up conference call with financial analysts, Boer noted: “We strongly believe that Ahold Delhaize as a combined company will deliver a better shopping experience for our customers. The customer is first and foremost the reason we exist and the key to a long, successful future. We see tremendous opportunities to leverage the resources and expertise of both companies and accelerate innovation to meet and exceed the expectations of customers through delivering better value, choice, service and ways to shop.”
He added, “We believe that we will be able to further enhance the customer experience by improving and enriching the customer offer by providing more choice and value in products and service and also more ways to shop. An important factor supporting the potential success of the combination is formed by the continued support and engagement of our associates. We believe the creation of a bigger, stronger and more capable company will result in an even better place to work and is able to guarantee a long-term sustainable future with more exciting career and development opportunities.”
At the conference call, when asked whether the company would need both McCann and Holt to both serve as U.S. chief operating officers, Muller responded: “Two experienced COOs doing both a very good job in the U.S. I think is not a luxury in such a set-up. And they are both part of the management board, so both are completely connected to our plans, to the commitment of the integration. And that’s why I feel it’s a good set-up, while both making sure that there is no distraction and that we run our programs, and secondly that we have full commitment to the integration process going further.”
Earlier during the call, Muller addressed the subject of store formats and banners: “As you know, the industry continues to change and evolve as customer preferences also change and evolve with the changing customer taste and the adoption of new technologies and expectations around convenience. The proposed combination of Ahold Delhaize will have a wide variety of store formats and ways to shop to meet those needs of virtually any customer profile. We intend to maintain this variety of banners and formats as this is the reason why we are so strongly anchored in our local communities. And we believe there are limited benefits to come from consolidating banner names or formats.”
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.