Royal Ahold NV and Delhaize Group can merge
Royal Ahold NV and Delhaize Group performed well in European trading. The companies surged in the market after reports regarding the likely merger of Dutch and Belgian grocers. This deal could encourage their Stop & Shop and Hannaford and Food Lion chains in the US.
Delhaize increased 19% to 86.08 euros; it is the best performance in almost a dozen years, whereas Ahold progressed 10% to 18.97 euros, the biggest gain since 2008. This led to increase in the values of the companies to 8.9 billion euros ($9.8 billion) and 17 billion euros.
In the US, both companies get nearly 60% of sales, and there is a lot of competition among retailers over there. According to analysts at Natixis, the companies would control nearly 4% of the US grocery market. It is expected that they will ensure their existence along the entire East Coast.
According to Natixis, a combined business by the companies in Europe would be the fourth-biggest food retailer. Hannaford has dominance in the Granite State, its main rival is Market Baskt. Hannaford operates over 180 stores in Maine, New Hampshire, Massachusetts, New York and Vermont.
Stop & Shop has 375 stores in New York, New England and New Jersey. For nearly a decade, the company operated many stores in New Hampshire but closed them in 2013. It was during the same year when Shaw's Supermarkets closed its several stores in the Granite State.
According to James Grzinic, an analyst at Jefferies in London, "Ultimately, both groups would benefit from a transformational deal in order to improve their structural prospects, and that is why we expect the likelihood of a combination to be high".