Food Retailers Ahold, Delhaize to Merge in $10.4 Billion Deal

NEW YORK ( The Deal) -- The Netherlands' Royal Ahold (AHONY) said on Wednesday it agreed to buy Belgium's Delhaize Group (DEG) for about €9.32 billion ($10.4 billion) to create a new grocery giant with €54.1 billion in annual sales.

Under the terms of the all-stock deal, Delhaize shareholders will receive 4.75 ordinary Ahold shares for every share they own, in a deal valuing Delhaize at €90.04 a share, 2.3% more than Tuesday's closing price.

Although the companies are diplomatically billing the industry's biggest deal in almost 10 years as a merger of equals, Ahold will own 61% of the combined entity and Delhaize the rest. Ahold CEO Dick Boer will serve in the same capacity at the new company, to be called AholdDelhaize.

"The proposed merger with Delhaize is an exciting opportunity to create an even stronger and more innovative retail leader for consumers, associates and shareholders worldwide," Boer said in a statement.

Frans Muller, Boer's counterpart at Delhaize, will serve as deputy CEO and chief integration officer of AholdDelhaize.

Both companies are active in the U.S., where Ahold owns the Stop & Shop, Peopod and Giant grocery chains and Delhaize owns Food Lion.

The deal has the unanimous backing of Delhaize's executive committee and board of directors, as well as Ahold's management and supervisory boards. It's due to be completed by the middle of 2016.

Three years after completion, the companies expect to reap annual synergies of €500 million.

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