Dick Boer has won acclaim for acquisitions he’s made — and for those he hasn’t. This balance of power of restraint has kept Ahold healthy and growing, observers say.
“The most important thing for me is that [Boer] has been fairly disciplined in terms of mergers and acquisitions,” Edouard Aubin, a Paris-based analyst who follows Ahold for Morgan Stanley, told SN. “That is always an overhang on the equity story: Investors fear that given Ahold’s fairly strong balance sheet they might do acquisitions that might not be rational. But he has remained rational and cautious, focusing on in-market acquisitions in Netherlands and U.S., not entering a new country or even a new geography. That’s important.”
Boer, however, has not been shy about making a deal when the right opportunities arise. This has been most visible in the U.S., where opportunistic purchases have made the Giant-Carlisle banner a force in the Philadelphia market. Its position was fortified there this year when Boer committed more than $100 million to acquire 16 Genuardi’s stores from Safeway (15 met approval from antitrust authorities, and they are being converted to the Giant banner this month).
Other smaller acquisitions in the U.S. include deals to acquire former King Kullen stores on Staten Island in New York City to bolster Stop & Shop’s positioning there and Fresh & Green’s stores in the Baltimore region to add to Giant-Landover’s fleet. In Europe, Ahold acquired a Netherlands-based competitor, Jumbo, and made a strategic deal to acquire a pure-play Internet retailer, Bol.com, which could support future growth opportunities on both sides of the Atlantic, Aubin said.
Carl Schlicker, chief operating officer of Ahold USA, credits Boer for crafting a framework of collaboration that has kept Ahold focused and moving forward.
“Dick has helped us rally around a common set of strategies that enable all of the Ahold companies to think globally while protecting what should remain locally managed in the dynamic marketplace of grocery retail,” Schlicker said.
Aubin predicted Boer will be challenged to lower costs and invest further in prices in the U.S. to keep Ahold banners growing.
“The biggest challenge in the U.S. is how they can lower their cost structure,” he said. “They have a fairly significant gap with Wal-Mart, ranging from 8% to 18%. I know that Stop & Shop has lower exposure to Wal-Mart and discounters in general, but I still believe this gap is unsustainable.”