“Merger Ahold Delhaize + Kroger would make sense”

A merger of Belgo-Dutch supermarket group Ahold Delhaize and its American competitor Kroger would make sense and allow for 1.2 billion euros in synergies. Together, they would be able to increase their value in the United States by 36 %.

1.2 billion in synergies

The idea is not new, but is now repeated by Bruno Monteyne of American research institute Bernstein as the need for consolidation is increasing on the US market in order to be able to face Amazon and Walmart. Combined, both groups would be almost as big as Walmart itself.

With its 2,800 supermarkets, Kroger is one of the biggest retailers in the US. Even though its turnover is almost twice as high as Ahold Delhaize’s, a merger would make sense as both chains are geographically complementary. Profiting from a larger scale after the merger, the company may be able to achieve 1.2 billion euros in synergies – which would push the company’s combined worth 36 % higher.

However, the Head of European Retail at Bernstein stresses that he does not know of concrete steps in this direction, and that this has been a purely hypothetical exercise. Moreover, there are some challenges to be overcome as well: what would be the future of Ahold Delhaize’s European activities, and what to do with the Dutch group’s high debts? Despite these afterthoughts, Ahold Delhaize’s shares skyrocketed after the report was published…