Ahold on Wednesday said it had agreed to settle a class action lawsuit related to its former U.S. Foodservice division for $297 million.
The Amsterdam-based company said it had indemnified U.S. Foodservice against damages arising out of this class action as part the terms of its sale of U.S. Foodservice to private equity investors in 2007. The division was one of several that Ahold divested in the wake of a larger 2004 accounting scandal.
According to a Reuters report, U.S. Foodservice had used shell companies and false invoices to artificially inflate the prices it charged certain customers who purchased product on a “cost-plus” basis from 1998 to 2005.
The settlement is subject to approval by the U.S. District Court for the District of Connecticut, which is anticipated to address the issue in late 2014 or early 2015, Ahold said in a statement. The total payment is subject to “potential reduction and/or termination” based on the claims of the class and the claimants who opt not to be bound by the settlement, the company said.
Ahold, parent of the Stop & Shop, Giant-Landover and Giant-Carlisle chains in the U.S., said it will fund its payment to the settlement fund out of its available cash balances, and expects this payment to take place in late 2014 or the beginning of 2015.
"We are pleased to have reached this settlement which resolves a legacy litigation since 2006 related to our former subsidiary U.S. Foodservice,” said Lodewijk Hijmans van den Bergh, member of the Ahold management board and chief corporate governance counsel. “The settlement permits us to avoid more lengthy, time-consuming and costly litigation, and to focus our resources and attention to our current business."
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