Royal Ahold NV, the international supermarket conglomerate buying Landover-based Giant Food Inc., filed with the U.S. Securities and Exchange Commission yesterday to sell up to $3 billion of debt securities and stock to raise capital for the deal.
The Netherlands' biggest retailer, which already owns four grocery chains on the U.S. East Coast, announced plans last week to buy the Baltimore-Washington region's dominant supermarket chain for $43.50 a share -- about $2.7 billion -- in cash.
The acquisition will bridge a geographic gap in chain ownership for Ahold, making it the fifth largest U.S. supermarket operator. Ahold, with anticipated annual sales of $35 billion and a reputation as an industry innovator, is expected to retain the home-grown, 176-store chain's name, management team and headquarters. Ahold's acquired chains typically operate autonomously.
The SEC shelf registration will allow Ahold to raise money by selling any combination of securities listed during a two-year period. By registering the securities in advance, the company can sell them as financing needs arise. The Dutch retailer also has $142 million of securities remaining unsold from a November SEC shelf registration, Ahold officials said.
"We have said that we will introduce a new stock offering, but we are not in a position currently to disclose information on the timing and contents and size of it," John Hol, an Ahold spokesman, said yesterday.
Such filings have been a common procedure for a company following an ambitious growth strategy, Hol said.
The company, awaiting regulatory approval by the Federal Trade Commission, expects the Giant Food deal to be final by late summer or early fall, he said.
Analysts have reacted positively to the merger, which is expected to allow Ahold to operate Giant and the other U.S. chains more efficiently by buying in larger volumes and combining expertise. Ahold also owns Stop & Shop in New England, Tops Friendly Markets in Upstate New York, Giant Food Stores of Carlisle, Pa., and Bi-Lo of Mauldin, S.C.
"Ahold is exploring energetically the synergies between the chains, which are all autonomous but have an opportunity to work together," said David Shriver, who follows Ahold as director of retail research for Credit Suisse First Boston in London. "From a consumer viewpoint, this will improve Giant's ability to meet customer needs."
Pub Date: 5/29/98