Ahold and Delhaize supermarket tie-up

<p>The merger of the Dutch and Belgian businesses could create one of the world’s largest retailers.</p>

Two European supermarket operators - Ahold and Delhaize – have agreed to merge, in a business deal that could create one of the world's largest retailers.

Dutch-based supermarket group Ahold started up in 1887 as a small family-owned shop operated by Albert Heijn and his wife. Mr Heijn's grandson, who was also named Albert, has been credited with introducing the bar code to the retail market. 

Delhaize was founded in 1867 by brothers Jules and Edouard Delhaize and their brother-in-law Jules Vieujant.  

The result will be a group with more than 6,500 stores in the US and Europe. Last year, the two retailers saw combined sales of €54.1 billion (£38.5 billion). 

In the US, Ahold operates two supermarket brands: Stop & Shop and Giant. Delhaize owns Hannaford and Food Lion. It is hoped that the merger will give the two companies greater scale in the US market and help the firms create more of a challenge against Walmart, reports the Financial Times.

In Europe, Ahold owns Albert Heijn supermarkets - it operates more than 850 stores in the Netherlands, as well as 25 in Belgium. Delhaize operates a number of supermarkets throughout Belgium.

A defensive move for the US market

Retail analyst Rahul Sharma explained that the deal was primarily defensive, giving both of the companies more of a chance to fend off competition from discount retailers like Walmart, as well as more upmarket chains like Sprouts and Whole Foods.

"It's very similar to the UK situation. They rae getting squeezed at both ends," he added.

According to the terms of the deal, Ahold shareholders will own around 61 per cent of the new company. The two firms have said that the deal will involve one-off costs of around €350 million, but they also estimate annual savings of €500 per year from the third year after the deal's completion.

Ahold chief executive Dick Boer will become chief executive of the new group and Frans Muller, chief executive at Delhaize will be his deputy, helping to oversee the integration of both companies. 

The deal should be completed by mid-2016, but is still subject to regulatory clearance and shareholder approval.

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