Delhaize seeks U.S. unit's shares

The Belgian parent of the Kash n' Karry chain says the stock swap will help it compete in a global marketplace.

By MARK ALBRIGHT

© St. Petersburg Times, published September 8, 2000

In another sign that the supermarket industry has turned into a global affair, the Belgian owner of the Food Lion, Kash n' Karry and Save n' Pack chains is moving to consolidate its control.

Delhaize Group, the Belgian parent that controls 57 percent of Delhaize America Inc.'s voting shares, said Thursday it is offering a $1.7-billion stock swap to shareholders of Delhaize America.

Delhaize America shareholders would end up owning shares in a parent company with supermarkets in 11 European and Asian countries. The parent company, which trades on the Brussels Stock Exchange and would own 100 percent of Delhaize America after the swap, is applying for its American Depository Receipts to be listed on the New York Stock Exchange.

Despite its global operations, Delhaize Group relies on United States customers for 71 percent of its sales and 80 percent of its profits.

Shares in the Class A stock of Salisbury, N.C.-based Delhaize America rose sharply on the news, closing Thursday at $18.25, up $2.31. Class B shares closed at $18.06, up $2.38.

Delhaize officials said the simpler ownership structure will help it keep up as American and European retail conglomerates race to tighten their grip in the grocery industry.

Wal-Mart Stores Inc. is challenging some of Europe's biggest players, while European supermarket chains such as Dutch Royal Ahold NV have been buying rivals to strengthen their hold in the United States and other countries.

Royal Ahold on Thursday agreed to acquire the Spanish supermarket chain Superdiplo SA for $1.2-billion. Wal-Mart bought the 240-store ASDA Group PLC in the United Kingdom last year and 95 stores in Germany in 1998. Meanwhile, the Paris-based retail conglomerate Carrefour SA is buying GB, Belgium's biggest supermarket chain.

At a multiple of 15 times earnings, the price being offered for Delhaize Group shares is a bargain compared to other big European supermarket chains.

Sandra Vandersmissen, a securities analyst with Fortis Bank, called the price "cheap," adding that Delhaize Group shares in Brussels closed down 6 percent Thursday amid concern the parent will have to sweeten the pot to pull off the deal.

The Belgian parent said the swap would simplify the ownership structure of Delhaize, would save $20-million a year in expenses and would start giving a boost to earnings in fiscal 2001.

"This offer brings together two companies that have been partners for 26 years," said Pierre-Olivier Beckers, chief executive of Delhaize Group. His family's 35 percent stake in the parent would shrink to 20 percent in the stock swap.

- Information from Bloomberg News was used in this report.

Delhaize at a glance

Here's a glimpse at the global holdings of Delhaize Group:

1999 REVENUES: $15.3-billion

NET INCOME: $181-million

EMPLOYEES: 145,000

PERCENTAGE OF SALES BY COUNTRY: Delhaize America, 71; Belgium, 20; others including Greece and Czech Republic, 9

U.S. STORES: Food Lion, 1,182; Kash n' Karry and Save n' Pack, 151; Cub Foods (Atlanta), 27; Hannaford Bros., 162

Source: company reports

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