Ahold, Delhaize merger clears further hurdles

Date : 17 March 2016

After a series of announcements from both companies about their potential merger, we look at the various steps that brings the combination of Netherlands-based Ahold and Belgium-based Delhaize a few steps closer.

Belgian Competition Authority gives conditional approval

Delhaize announced that the Belgian Competition Authority had conditionally approved the merger, but required that the retailers divest 13 existing stores and additional sites that both were intending to build stores on. Delhaize stressed that the stores were not to be closed and had to be sold as going concerns to ‘a buyer with the financial means and proven expertise to maintain them as viable and active competitors for Ahold Delhaize and other companies’.

The 13 stores that have to be sold are a mix of eight Ahold stores and five Delhaize franchised stores across a range of locations where the authority believed that competition would be diminished by a combination of the two retailers. Three of the stores are in Antwerp (two Albert Heijn and one Delhaize) and two in Ghent (one from each retailer), with the rest in a mixture of locations in Belgium. The store closures represent less than 2% of the retailers’ combined estate, thus leaving much of the portfolio intact.

The approval will decrease the number of Albert Heijn stores in Belgium to 30. However, there is nothing to suggest that this number could not rise again if the combined company wanted to rebrand stores to Albert Heijn or add them in locations where competition would not be affected. At the moment there has been no indication of what the two are planning to do after the merger with the Albert Heijn branded stores in Belgium.

Shareholders approve merger plans too

Separately, and earlier in the week, both retailers announced that their shareholders had voted to approve the merger. Delhaize said its shareholders had approved the merger by approximately 96.2% of the votes cast, while Ahold said that shareholders had ‘overwhelmingly approved the company’s proposal to merge’, without providing the figure for those who had voted in favour.

US competition authority the last step in the process

Following the approvals from shareholders and the Belgian Competition Authority, the last hurdle that Ahold and Delhaize have to clear is with the US Federal Trade Commission (FTC). It is likely that the FTC will conditionally approve the merger as well; requiring certain stores to be sold off where there is overlap. However, as with the conditional approval from Belgium, it is unlikely to be a substantial share of the combined estate and thus should not hold up the merger, which is set to complete in the middle of 2016.