Analysts: Tesco Should Buy Ahold for U.S. Biz
Analysts Peter Brockwell and John David Roeg
of ING believe Royal Ahold can be bought on the cheap, according to a Bloomberg report.
Tesco, they suggest, is the logical choice to buy Ahold and its grocery chains
on the East Coast.
“The U.S. market is too big to ignore, yet
any attempt to increase the scale of Fresh & Easy (Tesco’s chain on the
West Coast) could prove very risky,” the analysts wrote. “Ahold should be
viewed as a one-off opportunity to acquire an undervalued asset at a low
point in the U.S. consumer cycle.”
Buying Ahold’s U.S. businesses would
add about 700 grocery stores in the eastern part of the country to the 115
Fresh & Easy
stores Tesco has opened out West since 2007.
Ahold, which expects its U.S. business
to post a loss in the first half, has made some market share gains against
competitors including Safeway and Supervalu.
tie up with Ahold would enable Fresh & Easy to benefit from more
favorable supplier terms, give it access to Ahold’s talented U.S. management
team as well as enable Fresh & Easy to scale back the size of its
overhead cost base,” the ING analysts wrote in a research note.
analysts believe Ahold should be on the lookout for acquisitions based
on major savings achieved by the company over the past year. The company
is looking to achieve further cost-savings over the next fiscal year
that could be used to buy back shares or acquire other businesses.
spokesperson told Reuters, “We
never comment on market rumors and speculation.”
Questions: Do you see Ahold as more likely to make an acquisition or
to be acquired? Does a Tesco acquisition of Ahold make sense based on
the two companies’ respective businesses in the U.S.?
Should Consider Buying Ahold, ING Analysts Say – Bloomberg
- Talk of Tesco making £13.5bn bid for Ahold – The
- Ahold up; broker tips Tesco as a bidder – Reuters