Ahold and Delhaize top 10 supermarket group worldwide

30 June 2015 Consultancy.uk

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.

Ahold Delhaize
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.

Ahold and Delhaize brands

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.

Comparison Ahold vs Delhaize

Comparable
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.

Top 25 largest supermarkets of the globe

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Consumer goods start-ups grow interest from venture capital

23 April 2019 Consultancy.uk

Funding the latest consumer goods start-up has been a real money-spinner for venture capitalist firms, with a number of $1 billion companies – or unicorns – having emerged in the space in recent years. New analysis has explored the resulting corporate consumer products activity in the acquisitions space.

Consumer products have enjoyed years of strong growth as new markets opened in developing Asia. China in particular has enjoyed strong growth across a range of consumer good types as the country’s middle class expanded. Private equity firms have been keen to pick up targets in the space as they expand their portfolios to include additional local capacity as well as customers in new markets.

As a result, a study from Bain & Company has found that interest from PE firms in the consumer product space grew sharply in 2018, hitting 6.1% of all invested capital for the year, and making it the third most sought-after category. It is now only behind financial services (23.9%) and advanced manufacturing and services (13.9%).

Corporate venture capital investment

The ‘M&A in Disruption: 2018 in Review’ research found that growth in the segment reflects key changes in the segment as a whole. This is particularly true of insurgent brands, which often leverage local expertise in order to take on international giants in domestic markets.

Short change

The market changes have led to shifts in motivations for consumer goods company investments from PE firms. The number of strategic investments stood at 50% in 2015 compared to deals that increased scope. This has shifted significantly, with 34% of deals focused on strategic outcomes in 2018 compared to 66% for scope. The move towards scope reflects companies seeking out fast-growing products that enable stronger revenue growth streams.

Acceleration in scope-oriented M&A in consumer products

However, there were other motivations for deal activity in the space. Activist investors have put pressure on companies to expand their portfolios in recent years, with the trend expanding from just US targets to Europe.

Further trends

The other key shift in the space regards outbound deal activity. The study found that outbound deal activity has increased significantly in the Americas (up 363%) with total deal volume up only slightly (15%). Key deals included Coca-Cola and Costa, Procter & Gamble and Merck’s consumer health unit, and PepsiCo and SodaStream. In the Asia-Pacific region, outbound deal activity rose 195% while total deal activity fell sharply, by -36%. The EMEA region saw both a sharp decline in outbound deal activity, at -68%, as well as lower overall deal activity, which fell by 32%.

Cross-regional deal making

Deal-making in the current environment is increasingly fraught with uncertainties, as business models change on the back of new technologies, new consumer sentiments and wider market changes from new entrants. As such, acquisitions are increasingly useful as possible hedges on changes in market direction. As such, companies are increasingly pressed to take a future-back position, making sure to incorporate a vision of how the company needs to look in five years into acquisition strategy.

The firm notes that certain acquisitions which enhance a remembrance of a nobler mission, revive a sense of entrepreneurialism and engage directly with consumers may be necessary qualities in acquisitions that transform a company to fit market expectations in the coming decade. While going forward, focus on innovation, partnering with retail winners, reducing cost base and constantly reallocating scare resources will be necessary to protect market share in areas where insurgent local and strategic competitors are active.

Related: Private equity asset growth top priority for 2018.