Ahold - Delhaize merger required to survive in United States

Ahold - Delhaize merger required to survive in United States

American specialists believe strong competition on the American East Coast has forced Dutch Ahold and Belgian Delhaize to talk to each other. To make sure they can both survive, they will have to merge, these specialists feel.

No other choice

The two retail groups confirmed in May that they were have preliminary talks about a possible merger and Het Financieel Dagblad has now quoted several retail experts saying that both will have to collaborate on the American East Coast in order to survive there in the long run.

 

Over the past few years, there have been several large mergers and acquisitions in the United States: supermarket group Kroger bought competitor Harris Teeter for 2.6 billion dollars in 2013, while Safeway and Albertson's merged earlier this year and now represent a network of 2,230 stores.

 

Het Financieele Dagblad quotes McMillan Doolittle's Neil Stern who says that retailer cannot do anything else but merge as there are very few new traditional supermarkets being built. He also issues a warning: "Companies have a tendency to overestimate the cost-saving benefits and to underestimate the time required for integration. Ahold and Delhaize have their own formulas, with their own discount strategies and different competitors."

 

Added value

Ahold and Delhaize have complementary activities on the American East Coast through their respective chains Hannaford and Food Lion: they are both active in the area, but are not each other's competitor. Analysts estimate there is barely a 20 % overlap in their network of more than 2,000 supermarkets.

 

Several experts have said both groups can offer each other some advantages in the United States. While Delhaize has lower costs and a distribution chain (something Ahold outsources), the Dutch group performs better when it comes to profitability and its investments in growth formulas.

Questions or comments? Please feel free to contact the editors


Arket Brussels opens: discover H&M's latest concept

14/09/2017

On Friday 15 September, H&M Group’s new store formula opens its doors on the Guldenvlieslaan in Brussels. The press got a sneak preview and discovered a surprising mixture of fashion, interior design and food. 

Nordstrom opens store without storage

13/09/2017

American fashion chain Nordstrom is to trial a new store formula in Los Angeles next month, in which customers will only be able to get advice and try out clothing. Purchases can be picked up at the store at a later date.

Primark benefits from weaker British economy

12/09/2017

Irish fashion chain Primark takes full advantage of the weak British economy, which prompted its parent company AB Foods to adjust its full-year forecast. The chain will also continue its expansion plans.

Participatiemaatschappij Vlaanderen invests in FNG

11/09/2017

Government investment fund Participatiemaatschappij Vlaanderen (PMV) will invest 15 million euro in fashion group FNG in return for 5 % of its shares. The money will go towards international expansion.

Gap Inc will focus on Old Navy and Athleta

08/09/2017

American fashion company Gap will alter its internal strategy and turn its attention to Old Navy and Athleta. Gap and Banana Republic, which both received the most attention up until now, will have to step aside.

Global Fashion Group cuts losses

08/09/2017

Global Fashion Group, the fashion group founded by investment group Kinnevik and Rocket Internet, managed to lower its losses even more in the second quarter. On top of that, turnover grew more than 25 %.

Back to top