On the table: Grocery giants Ahold and Delhaize talk merger
May 19, 2015 05:08 PM
Two of Europe’s biggest mass merchants and grocery store chains are in preliminary merger talks. And if the deal between Ahold N.V. and Louis Delhaize Group does go through, it would create a European online retailing organization with combined annual web sales of more than $1.4 billion—and more opportunity to expand online across Europe.
Last week Ahold, No. 18 in the Internet Retailer 2014 Europe 500, in a brief public acknowledgement confirmed it was in preliminary merger talks with Delhaize.
“Delhaize Group confirmed today that it has entered into preliminary discussions with Royal Ahold N.V. to explore the opportunity of combining the two companies,” Delhaize says.
Ahold is a Netherlands-based company that owns and operates European grocery store chain Albert Heijn, U.S.-based online grocer Peapod LLC, No. 69 in the Internet Retailer 2015 Top 500 Guide, and Bol.com, a Dutch online mass merchant. Ahold generates annual sales of $13.60 billion. Delhaize is a Belgian international food retailer with stores in seven countries on three continents. Delhaize operates 3,410 stores and has annual revenue of $29.40 billion.
In Europe, Delhaize operates Cora.fr, a French grocery website, and Delhaize.com. Delhaize web sales are small compared to Ahold’s. In 2015 Internet Retailer estimates that Delhaize will generate web sales of about $140 million compared with $1.42 billion for Ahold.
In addition, Ahold has outlined aggressive plans to generate annual web sales of $3.14 billion by the end of 2017. Ahold says its online growth strategy has three parts: more customers from general and market-share growth, geographic expansion on its own and potentially through acquisition, and increased product selection.
The company says it has invested in technology, marketing and online capabilities in recent years, and it singled out the acquisition of Bol.com in 2012. That purchase brought its total number of I.T. personnel to more than 1,000, based in four technology hubs in the U.S. and the Netherlands. “We offer a great omnichannel proposition for our customers, creating a strong platform for continued future growth and long-term value creation,” Ahold CEO Dick Boer told analysts in November 2014 during a presentation on its e-commerce expansion plans.