Ahold restructures and aims for the top league

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Ahold chief executive Dick Boer commented last week that the company was waiting for the right time and opportunity for an acquisition.

After recovering from a huge controversy eight years ago, when a number of financial irregularities were highlighted in the company’s US operations, Ahold has undertaken a comprehensive restructuring programme.

The company now has a substantial pile of cash at its disposal and the opportunity is ripe for expansion.

Interestingly, around 60% of Ahold’s sales come from its operations in the US. It is unusual for a retailer to make most of its turnover outside its home market, and it is even more unusual if the largest share of sales comes from just one single country abroad.

For this reason, it would seem that Ahold has the expertise and tools to do well in a new market.

However, any new acquisition targets must be easy to integrate into the company, be the first or second player within the market and be affordable.

In March of this year, Ahold entered the Belgian market with its Albert Heijn banner, a move that will provide it with long-term growth potential outside its saturated home market.

The best acquisition targets for Ahold will be those companies that can benefit from Ahold’s first-rate logistics, high stock rotation and strong private label lines, and Ahold’s move into Belgium fuels speculations about a tie-up with Delhaize Group whose store network in Belgium could well fit the bill.

Delhaize Group is not only a new member of the Ahold-dominated AMS sourcing alliance, but also a fierce competitor in Ahold’s most important market, the US East Coast.

By exerting price and margin pressure on its Belgian competitors, Ahold could make the publicly-listed, but partly family-owned Delhaize Group nervous, and possibly more open-minded towards such a tie-up.

Through such a move, Ahold – which has had a painful drop in the global retailers’ rankings over the past couple of years due to its drastic restructuring measures, but has recently found the confidence and means to expand again – could immediately play a more important role in the world’s top league again.