Delhaize in merger talks with Albert Heijn

Belgian supermarket chain Delhaize is involved in talks “at the highest level” with Ahold, the company behind Dutch chain Albert Heijn, regarding a possible merger, according to financial daily De Tijd. The talks are said to be in a preliminary phase and any agreement is a long way off.

A merger would create the new largest supermarket chain in Belgium, knocking Colruyt out of first place. Delhaize is currently second largest, with a 22% market share. Albert Heijn lies far behind, with only 30 stores in Belgium. A merger would not be expected to raise any competition issues.

The two sides have begun merger talks once before, in 2006. Talks reached an advanced stage but broke down over a structural question: Ahold wanted to take over Delhaize, but the Belgian group saw the move more as one of a merger between equals.

Just under a year ago, Delhaize announced it would close 14 stores and lay off 2,500 staff in restructuring aimed at breaking down its competitive disadvantage, estimated at between 15% and 30%, on staff pay and conditions. The restructuring would allow it to invest €450 million in 2015-2017.

Neither Ahold nor Delhaize is controlled by strong family interests – something that had an effect of the failure of earlier talks. Then Delhaize CEO Pierre-Olivier Beckers was a member of one of the founding families. The current board includes one family member and large institutional investors such as BNP Paribas.

Photo courtesy Delhaize Group