Dutch-based supermarkets operator Ahold has reached a deal to buy Belgian peer Delhaize. As Hayley Platt reports the merger will create the sixth-largest food retailer in the United States and the biggest in Europe's Benelux region.
TV AND WEB RESTRICTIONS~** It's a merger that will create one of the largest supermarket operations in the U.S and the biggest in Europe's Benelux region. Dutch-based Ahold - which has a market value of around 17 billion euros - and its Belgian peer Dalhaize - worth around half that - have agreed to join forces. Alix Stewart is a Fund manager at Schroders. SOUNDBITE: Alix Stewart, Fund Manager, Schroders, saying (English): "When you look at the footprint of the two companies there are a lot of synergies. They're very big right along the east coast of America. Obviously they've got Holland and neighbouring Belgium and obviously there's a tie up in Belgium as well some in eastern Europe, so it does seem to make strategic sense." Under the new company Ahold would have a 61 percent stake. With Delhaize owning the rest. The merged company will have 6,500 stores worldwide. And they'll deliver sales of over 54 billion euros In Europe Ahold operates under the name Albert Heijn. In the States it runs Stop & Shop and Giant stores. Delhaize owns the Food Lion and Hannford chains. By combining its operations, the group expects to make annual savings of around 500 million euros. SOUNDBITE: Alix Stewart, Fund Manager, Schroders, saying (English): "I guess any cost cutting that you can get out of it will help your margins and it obviously has been quite competitive but I do think it's also part of where we are in the cycle now. Ahold has been giving moneyback to shareholders now it looks like they think they can do something better with the cash in terms of investment." The deal is expected to close in mid-2016. Ahold boss Dick Boer as its CEO. He's already agreed to return 1 billion euros to shareholders through a special dividend. Ahold shares have gained more than 10 percent since the deal was first mooted in May. Delhaize's have risen 20 percent.