SALISBURY, N.C. -- Ralph W. Ketner, former chairman and one of the founders of Food Lion here, is up in arms -- again.
which Food Lion is a part -- to voice his concerns on several matters, including the pending $3.35-billion merger with Hannaford Bros. Co., Scarborough, Maine, which he opposes.
Ketner aired his opinions in a guest column two weeks ago in the Salisbury (N.C.) Post, in which he called on Delhaize shareholders to write to the chairman of the Federal Trade Commission urging that the merger be denied. His intent, he said, "is not to provoke Delhaize but enlighten fellow stockholders."
He told SN he hopes the company is more responsive to his concerns this year than it was a year ago, when he expressed his opinions in the local newspaper and again in person at the annual meeting.
"But management never responded to me at the meeting or in the newspaper, as they had promised," Ketner told SN.
Ketner, 79, is a major shareholder in Delhaize America, whose holdings include Food Lion here and Kash n' Karry Food Stores, Tampa. The majority of the company's stock is owned by Delhaize Le Lion, Brussels, Belgium.
Ketner founded Food Lion in 1957 with his brother and a mutual friend. He retired from active management in 1991 and from the company's board in 1993.
During last year's meeting he questioned the severance package paid to Tom E. Smith following his resignation as president and CEO in April 1999, the company's investment in a joint venture in Thailand and other financial dealings.
In his letter this year, Ketner wrote, "It seems to many of us that Delhaize is interested only in mergers and acquisitions, not in minding the store.
"Delhaize's plan to merge Food Lion with Hannaford would be a disaster for our company. Food Lion stock has plummeted -- from $12 to $6 [prior to a reverse split] -- since the announcement of the proposed deal.
"It is my opinion that this drop is due to Delhaize paying roughly $1 billion too much. My understanding is that the previous highest offer was for $63 a share [and] Delhaize offered $79 a share -- more than 25% higher [and] $1 billion too much!"
According to Ketner, buying Hannaford at that price would result in a $2.5-billion write off for goodwill on Delhaize's balance sheet, resulting in "a charge of $62.5 million per year on the P&L statement for the next 40 years."
Ketner also said he objects to Delhaize's plan to borrow $3 billion to finance the transaction, at an annual rate of 7.8%, or $234 million in interest expense per year. "Can [the company] afford or justify this? Absolutely not!
"The FTC is now studying the proposed merger. Our only hope is that they will prohibit it, and I strongly suggest all stockholders write immediately to the FTC chairman urging that this merger be denied."
The letter included the postal and e-mail address for Robert Pitofsky, FTC chairman.
Asked to respond to Ketner's remarks, Tawn Earnest, a Delhaize spokeswoman, said supermarket operators in today's competitive environment must make acquisitions or be acquired themselves. "Hannaford is a premium brand that called for a premium price," she said, "and we are paying what the market was demanding.
"And instead of being a regional Southeast retailer, we will be a multi-regional, multi-banner company and the first in the U.S. with stores from Maine to Florida."
Ketner also questioned why the annual meeting is being held this year in Tampa, rather than here in Salisbury, where Food Lion is based and where the meeting has been held since 1957.
"It seems [Delhaize management is] hoping that the 500 miles from North Carolina to Florida will make the meeting much more comfortable for themselves," he wrote.
Earnest said the meeting is being held in Tampa "to show our multi-regional strength. We want to emphasize we are a multi-banner, multi-regional operator."