No plans to merge Ahold, CEO says

U.S. retail units have no offers, he adds

May 08, 2007|By Bloomberg News

AMSTERDAM, Netherlands -- Royal Ahold NV Chief Executive Officer Anders C. Moberg said yesterday that the Dutch owner of Giant Food aims to remain independent and hasn't received any offers for its U.S. retail business.

The Swedish-born executive, 57, said unexpectedly last month that he would resign, sparking speculation that his successor might merge the company with Belgium's Delhaize Group. Moberg said yesterday that he will become head of Majid Al Futtaim Group, a Dubai-based shopping mall developer.

Moberg turned Ahold around after an accounting scandal centered at its Columbia, Md.-based U.S. Foodservice division and will leave in July after four years as CEO. Ahold last week agreed to sell U.S. Foodservice for $7.1 billion, prompting Standard & Poor's to raise the company's credit rating to investment grade for the first time since 2003.

"Our main objective is of course to stay independent and try to create as much shareholder value as we can that way," Moberg said.

He said he would "consider" other plans if they created more value, adding that Ahold will need as long as two years to meet its long-term retail targets.

The Dutch company plans to sell its Tops chain by the end of this year to focus on increasing revenue at its Giant and New England's Stop & Shop chains.

The decision to sell U.S. Foodservice followed demands in August by Centaurus Capital Ltd. and Paulson & Co., two hedge funds holding about 6 percent of the retailer's shares, that Ahold divest all its U.S. stores.

Shares of the Dutch company more than doubled under Moberg's tenure. He said he will keep his Ahold shares and hold onto his options for "as long as possible."

The company won't buy Hema, a Dutch retailer, Moberg said. Ahold is working on its own strategy to lift nonfood sales in the Netherlands and doesn't need Hema to do so, Moberg said. Ahold aims to double nonfood sales by 2010, he repeated.

The executive said he is "confident" that Ahold will eventually achieve its long-term target of 5 percent sales growth and a 5 percent retail operating margin, though the company won't meet that target this year, he said.

In March, Ahold said the operating margin would be between 4 percent and 4.5 percent this year.

Moberg is leaving the Dutch retailer a year earlier than planned, as he was eligible for reappointment in 2008, according to the company's annual report.

There was no clash or disagreement between him and the supervisory board on the strategy, Moberg said.

Moberg will be replaced by Chief Financial Officer John Rishton until the company makes a final decision on the post this year.

Moberg, who said he recommended that Rishton be acting chief executive, declined to comment on a possible permanent successor.

Ahold's borrowings will be at an "optimal level" after the company cuts debt by 2 billion euros after the sale, Moberg said.

He declined to give a time frame for when the company will reduce the debt, and said Ahold will start a 3-billion-euro buyback program "soon."

Ahold might use some excess proceeds from the U.S. Foodservice sale to make smaller acquisitions, Moberg said, declining to comment on other options.

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