EUROPE - The Delhaize Group and Ahold, after announcing simply that they were in talks of a merger and not giving any further information, are now reportedly aiming to have a deal struck as soon as the end of this month.
According to a Bloomberg report, discussions are moving swiftly and a goal has been set to reach an agreement before summer break kicks in, combining about 6,600 stores and about $68.5 billion in sales.
"Both groups are more mature than in 2007 and given the interesting synergy potential we believe the likelihood of success is clearly higher," analysts at KBC wrote in a note to clients, according to a Reuters report, referring to when the retailers tried and failed to come to an agreement. While those talks could still fall through, reports appear more confident this time around.
A merger between Ahold and The Delhaize Group would create a top 20 global retailer, with footholds in Europe and the U.S, potentially forming the fourth largest food retailer and accounting for four percent of the U.S. grocery market, Natixis analysts said.
Both retailers, however, continue to keep things hushed as they declined to comment further on any progress made in their discussions. But both did see an encouraging spike in shares this week, with Delhaize’s shares in Brussels, Belgium, climbing as high as 15 percent since the announcement of a possible merger with Ahold last month, and Ahold 2.4 percent jump in its shares in Amsterdam, Netherlands.
If combined, Bloomberg reports the retailers see little geographic overlap in the U.S. and European markets so there shouldn’t be significant store closures. Because talks are private, attendees that did comment in the report requested to remain anonymous, but confirmed that annual savings related to purchasing, supply chain, as well as overlaps on headquarters and administration are being discussed.
The deal, at this time, would currently look to be an all-share transaction or a mix of shares and some cash, though an all-cash deal isn’t in the plans, among other matters.
AndNowUKnow will continue to keep you up to date on this story as it develops.
