WASHINGTON — An agreement to divest 81 stores has cleared the way for the merger of Ahold NV and Delhaize Group.
The companies agreed to sell the stores, in seven states, as a condition for approval of the deal by the Federal Trade Commission. The green light from the regulatory agency allows for creation of a supermarket operator with more than 6,500 stores globally that in 2015 generated combined sales of 62.6 billion euros ($68.02 billion). The two companies’ subsidiaries in the United States achieved combined sales of $44.14 billion and ended last year with 2,079 stores.
“Together, Ahold and Delhaize Group have been working hard to resolve the competition concerns raised by the FTC, and we are pleased to have found strong, well-established buyers for the stores we are required to divest,” said Dick Boer, chief executive officer of Ahold. “We are confident that the new owners will continue to serve local communities well.”
When the proposed merger was announced in June 2015, Ahold operated 760 supermarkets under the Stop & Shop, Giant and Martin’s banners in 10 Eastern states and the District of Columbia. Delhaize had 1,291 supermarkets under the Food Lion and Hannaford banners in 14 Eastern and Southern states. The units marked for divestiture account for about 4% of the two grocers’ combined store base in the U.S. and generated around 3% of their combined 2015 net sales. The sale will leave the combined organization with more than 1,900 locations ranging from New England to South Carolina.
The buyers of the stores to be sold are:
• New Albertson’s Inc. (part of Albertsons Cos., based in Boise, Idaho), purchasing one Giant Food store in Salisbury, Md.
• Big Y Foods Inc. (based in Springfield, Mass.), purchasing seven Hannaford stores in eastern Massachusetts.
• Publix Super Markets Inc. (headquartered in Lakeland, Fla.), buying 10 Martin’s stores in Richmond, Va.
• Saubel’s Market Inc. (based in Shrewsbury, Pa.), acquiring one Food Lion store in York, Pa.
• Shop ’n Save East LLC (part of Minneapolis-based Supervalu Inc.), purchasing 18 Food Lion locations in Maryland, Pennsylvania, Virginia and West Virginia.
• Tops Markets LLC (headquartered in Williamsville, N.Y.), buying one Stop & Shop store in Massachusetts and three Stop & Shop units and two Hannaford locations in New York.
• Weis Markets Inc. (based in Sunbury, Pa.), acquiring 38 Food Lion stores in Delaware, Maryland and Virginia.
The sales will redraw market share maps in some areas. For Big Y, Publix, Supervalu and Weis, the acquisitions represent significant expansions.
For example, earlier this year Publix announced it would open two stores in Virginia (one in Greater Richmond), probably in 2017 and 2018. This acquisition enables it to gain significant share much more quickly.
Big Y, which has a strong base in western Massachusetts, will enlarge its presence in the eastern part of the state.
For Weis Markets, which operates 162 stores in Pennsylvania, Maryland, New Jersey, New York and West Virginia, the deal represents a dramatic expansion and entry into new states.
“This transaction provides us the opportunity to expand into markets that are contiguous to our current trade area, particularly in Maryland, where we are adding 21 stores — essentially doubling our store count in a state where we have steadily grown in recent years,” said chairman, president and CEO Jonathan Weis. “We’re also looking forward to expanding our operations into two adjacent states with the addition of 13 stores in Virginia and four in Delaware.”
While Supervalu will initially convert its acquired stores to its Shop ’n Save format and operate them directly, it is in discussions about them with some retail customers of its wholesale division. The former Food Lion units are conventional supermarkets measuring approximately 35,000 square feet. Supervalu plans to provide them with full-variety meat departments, full-service delis and bakeries and expanded produce departments.
The stores “should provide excellent opportunities for our wholesale customers, who were unable to buy them outright,” said, Supervalu president and CEO Mark Gross.