If the announced merger between Ahold and Delhaize is given the go-ahead by the competition authorities and its shareholders, then a new top 10 supermarket player is set to be born. With a combined revenue of more than €54 billion and 6,600 shops in 8 countries, the combined Ahold Delhaize will come in at 10th place just under the German discounter Aldi. The merger is primarily intended to strengthen the position of both companies in the American market.
Last week supermarket giants Ahold and Delhaize unveiled a joint intent to merge. With the joining of forces the two supermarket groups expect that in time around €500 million in saving can be realised through synergies, being better prepared to meet increasing international competition and the rise of discounters. The two companies also share a considerable amount of DNA - Ahold and Delhaize are both originally family businesses, both have followed a local brand strategy and they have a similar culture, says Dick Boer, CEO of the Netherlands-based Ahold. In addition, both businesses are complementary to each other in the American market. Both Ahold (including: Giant Carlisle, Giant Landover, and Stop & Shop) as Delhaize (Food Lion and Hannaford) are active along the East Coast of the US, with the combination meaning that the whole of the east coast is now as good as covered.
What the companies describe as a “merger of equals” still needs to be ratified by the competition authority and the shareholders of both parties, while the boards of both companies stand unanimously behind the merger. The merged businesses will trade under the name Ahold Delhaize. 61% of the shares of the new concern will be held by the shareholders of Ahold, and the remaining 39% will go to Delhaize shareholders. The head office will be in the Netherlands.
Royal Ahold is known in the Netherlands for its large supermarket Albert Heijn, liquor store Gall & Gall, pharmacy Etos and web-shopping giant bol.com, but also other shopping chains, including Giant, Martin’s and Peapod. The Belgian Delhaize, that has its head office in Brussels, is known for the same named supermarkets in Belgium, as well as being the owner of Tom & Co, Alfa-Beta Vassilopolous in Greece, Mega Image in Romania and Maxi in Serbia.
In terms of the number of shops owned by both parties, they are comparable – with 3.200 for Ahold in 5 countries compared to 3.400 owned by Delhaize spread over 7 countries. Ahold however, has larger revenue and more than six times the profit of its Belgian partner to be. The unified retail concern will employ around 375.000 employees, providing products and services to around 50 million clients per week.
Through the combination of the two companies, a new player in the top ten, worldwide, joins in with the top level play. With combined revenues of €54.2 billion, Ahold Delhaize will take the tenth spot on the list of the biggest supermarkets in the world. Before the merger Ahold came in at #20 on the list, while Delhaize found itself in spot #25. The American Walmart Stores is by far the largest supermarket player in the world, with a turnover of €393.2 billion – a total of €310 billion more than the #2 position The Kroger, whose turnover is in the tune of €82.9 billion. Costco, Tesco and Metro Group also find themselves in the top 10.