Ahold, the Dutch-American food retailer, is continuing its march up and down the Eastern seaboard of the United States, a process that is being greatly accelerated by its planned buyout of Stop & Shop Cos., Quincy, Mass.
The latest acquisition deal promises to boost the sales volume generated by the operating companies of Ahold in the United States alone to about $12.4 billion, on a pro forma basis, counting Stop & Shop's $4.1 billion. For more on Ahold USA's total holdings, and on the latest acquisition agreement, see the news article on Page 1. As for Stop & Shop, it's the operator of more than 150 stores under its own banner, the vast majority of which are superstores. Its Li'l Peach Convenience operation was earlier slated for divestment. Stop & Shop also has been an acquirer lately. It bought Purity Supreme last November and Melmarkets in December. As that sales volume rolls in, Stop & Shop may approach $5 billion in sales.
The news that a company the size of Stop & Shop is slated to come under the aegis of Ahold casts the latter in a new light. Here's why: · Ahold will be tipping toward the United States in terms of sales volume with well over half its worldwide sales of $22.1 billion produced on these shores. Ahold's historic business is the Albert Heijn supermarket chain in Holland, but it also has non-U.S. food businesses in Central and Southern Europe and Asia. · Ahold's geography along the Eastern seaboard is filling in. It has an increasingly contiguous network of supermarkets running from the deep South through New England. Most of that territory is functioning well. Ahold has little reason to complain about acquisitions, although some proved to be stronger than others. Ahold has been working toward finding improvements at Edwards, Mayfair and what was Red Food. Ahold bought Red Food Stores, Chattanooga, Tenn., and later subsumed it into Bi-Lo. Bi-Lo is the first company Ahold bought in the United States; that transaction came in 1977. Ahold may find new challenges in the Purity stores Stop & Shop bought last year. · Ahold's management outlook may change. In its early years in the United States, Ahold was little more than a holding company, but more recently it fostered some low-level integration of its chains, especially in terms of centralized distribution of low-velocity products and information-sharing.
Even today, Ahold USA's president and chief executive officer is based in Holland, but travels often to the Ahold USA office. The U.S. headquarters is now in New Jersey, but is to be moved in a couple of weeks to Atlanta. Perhaps after the latest acquisition is under its belt, Ahold will approach critical mass -- the size at which it makes better sense to further unify distribution, logistics, MIS and other backstage operations, even if upper management remains fairly hands off. In any case, it's inescapable that there is a new power at work in the industry: Ahold USA, soon to be North America's sixth-largest food retailer. And growing.
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