Delhaize meeting offers little dissent

The parent of Kash n' Karry and Food Lion unexpectedly hears little debate at its shareholders meeting in Tampa.

By MARK ALBRIGHT

© St. Petersburg Times, published May 5, 2000

TAMPA -- What was supposed to be a tense confrontation at the Delhaize America annual meeting Thursday turned out to be a tame affair after the supermarket chain's leading antagonist failed to make an appearance.

Management of the Salisbury, N.C., chain that operates Kash n' Karry and Food Lion was expected to get an earful from founder and former chief executive Ralph Ketner. Instead, they got only one question from a shareholder, a retired vice president who expressed "concern" that the company's stock has been in the ditch because of a pending acquisition.

Delhaize president and chief executive Bill McCanless took the cue to put on a slide show explaining why Delhaize is paying $3.6-billion for the Hannaford Brothers Inc. chain in the Northeast and how it will help Delhaize stock rebound in the long-run.

A handful of shareholders mixed in with a crowd of 150 dominated by Delhaize executives said the explanation was good enough for them. The meeting ended in 50 minutes.

"It's clear that stocks for the whole food industry collapsed along with Delhaize," said Raymond Maddox, a Lakeland retiree who has held Delhaize shares for three years. "I'm not selling them. I'm just not buying any more."

Delhaize shares closed Thursday at $17.19, up 6 cents. Before the Hannaford deal was announced in August, the stock traded at a high of $38.

As for the absent Ketner, the 79-year-old former CEO was back in North Carolina nursing a broken shoulder suffered during a recent vacation to Spain. He said he was thrown about 30 feet into a fence after grabbing a handrail to step onto a moving merry-go-round that he thought was standing still. He feared traveling to Florida could aggravate the pain.

Reached at home, Ketner remained opposed to the debt used to finance the Hannaford purchase, which he says will put a crimp on earnings for years.

"I don't blame them for moving the meeting," Ketner said. "Last year at the annual meeting, the stock was down 42 percent and the CEO promised the stock price would get back up. Here it is a year later and it's down more than 50 percent."

Delhaize officials denied Ketner's claim that they moved their annual meeting hundreds of miles from the company's headquarters to silence critics. It was the first time in the company's 43 years that the annual meeting was held outside North Carolina. Officials said they hit the road to showcase the growth of their 142-store Kash n' Karry chain that is based in Plant City.

Now a full-fledged subsidiary of the reorganized Delhaize, Kash n' Karry also has a new president and chief executive, Bruce Dawson, who was promoted from operations vice president of Food Lion's biggest division in February. Dawson unveiled plans for 10 new Kash n' Karry stores, up from six new ones in 1999. Five are under construction in the Tampa Bay area.

Reached at home, Ketner remained opposed to the debt used to finance the Hannaford purchase, which he says will put a crimp on earnings for years.

"I don't blame them for moving the meeting," Ketner said. "Last year at the annual meeting, the stock was down 42 percent and the CEO promised the stock price would get back up. Here it is a year later and it's down more than 50 percent."

Delhaize said the lack of shareholder criticism proved there was little shareholder discontent with the acquisition that would lift Delhaize from the nation's seventh- to fifth-largest grocer.

"We've had strong support from our shareholders," chairman Pierre-Olivier Beckers said. "They know this acquisition is something we must do. They are as frustrated with the stock price as we are. Wall Street has punished all supermarkets as much as us."

The purchase is critical to Delhaize's plan of remaining a player in the rapidly consolidating industry. Many grocers today are convinced size is key to survival in an industry that earns less than 1 cent on each dollar of sales. Even after the purchase, Delhaize will be half the size of the three biggest chains -- Kroger Co., Safeway Inc. and Albertson's Inc. -- while falling behind a rival Dutch concern, Royal Ahold SA, which is the fourth-biggest chain. Like other grocers, Delhaize also is being challenged by Wal-Mart, which in less than a decade burst into the top 10 grocery retailers.

Delhaize is waiting for the Federal Trade Commission to review the antitrust implications of the Hannaford deal, which will lead to overlap with Food Lion stores in Virginia and North Carolina.

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