CEO to leave Royal Ahold

Moberg was brought in after U.S. Foodservice scandal

April 28, 2007|By Andrea K. Walker | Andrea K. Walker,Sun reporter

In a surprise announcement, Royal Ahold NV said yesterday that its chief executive officer - brought in four years ago to turn around the company after a nearly $1 billion accounting scandal at Columbia food distributor U.S. Foodservice - is stepping down a year before his contract was to expire.

The Dutch food company, which also owns Giant Food, said that Anders Moberg would leave July 1 to "pursue other business interests." Moberg consulted with the board, which agreed it was time for a change in leadership, according to a statement released by the company yesterday.

His departure comes as the company has faced pressure from major shareholders to sell its financially weak U.S. divisions, including Giant.

The company said that there are no plans for changes in the U.S. structure and that Moberg wasn't pushed out of the company.

John Rishton, Ahold's chief financial officer, will head the company in the interim. The company is expected to choose a successor by the end of the year.

Moberg, who joined Ahold in 2003, led the company through a tumultuous time as it was forced to restate earnings because of accounting discrepancies at U.S. Foodservice.

Investigations found that the food distributor booked more rebates and discounts than it received from vendors and improperly counted them as revenue.

Moberg stabilized the company, selling off pieces of the business and reducing debt. Under his leadership, U.S. Foodservice gained sound financial footing, becoming one of the better performing units at the company. In November, he put U.S. Foodservice up for sale when analysts put the division's worth at $5 billion.

"Anders has made a great contribution to restoring the health of Ahold," Rene Dahan, Ahold board chairman, said in a statement. "With this achieved, and the strategy for Ahold's future profitable growth in place, now is a good time for new leadership to be appointed to take the company through its next set of challenges and opportunities."

But shareholders also have shown recent signs that they weren't happy with the direction in which the company was now headed.

The U.S. retail business, for one, continues to struggle financially. Giant has had a string of weak sales seasons even as the company has implemented a plan to reduce the prices of many items.

"There was a lot of preoccupation with U.S. Foodservice, but I think the problems were much more pervasive than that," said Bill Bishop of retail consultancy Willard Bishop in Barrington, Ill.

Last summer, shareholders Centaurus Capital Ltd. and Paulson & Co., two hedge funds which together own about 6 percent of the company, called for Ahold to divest all its U.S. businesses to increase shareholder value. Neither company returned phone calls yesterday. Ahold has sold some U.S. properties, including Bi-Lo in the south and Tops in Ohio, but never looked at selling the U.S. division as a whole.

"I think it was always the goal to get back to maximizing the investment of the company or the value of the company," said Jeff Metzger, editor of the industry trade magazine Food World. "Public indications implied that Moberg wasn't as interested in maximizing that investment [by] selling pieces of the company as some hedge funds and shareholders suggested."

"Moberg did a very good job with Phase 1, which was the cleanup," Metzger added. "But Phase 2, in my opinion there has not been a great sense of direction."

Some predict that new management could speed up divestitures and could result in the sale of the U.S. division.

"I don't think anybody expects the remaining retail division in the U.S. will improve with the competition continuing to move in on them," said David J. Livingstone, owner of DJL Research, a supermarket consultancy in Pewaukee, Wis.

The news also renewed speculation on a merger between Ahold and Belgian supermarket chain Delhaize, which owns Food Lion. There has been talk for months about a marriage between the two.

Caro Bamforth, an Ahold spokeswoman, said new leadership didn't signal a change in the U.S. operations. She said U.S. Foodservice is on schedule to be sold by the end of the year.

Bamforth also said that Moberg's departure wasn't a sign of conflict between Moberg and the board or dissatisfaction with the way that he was running the company.

"This is Anders' decision," Bamforth said. "He took it in consultation with the supervisory board. Now is the most appropriate time because he had taken the position that he wanted to move on."

Ahold shares rose 7 cents to close at $12.69 yesterday.

andrea.walker@baltsun.com

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.