Dutch grocery company Royal Ahold NV said yesterday that it will delist its shares from the New York Stock Exchange and remove its registration from the U.S. Securities and Exchange Commission, significantly paring down its relationship with the American regulatory market.
The company, which owns the area's largest grocery chain, Giant Food, said it decided to delist to reduce costs by eliminating some of the complexities of reporting to different regulatory agencies. The benefits of maintaining a U.S. registration and a NYSE listing have declined over time, the company said.
An Ahold spokeswoman said the company remains committed to its U.S. grocery customers.
"You should not read anything into the delisting in terms of our American businesses," said Ahold spokeswoman Caro Bamforth.
The majority of Ahold shares held by investors in the United States are acquired through Euronext Amsterdam, which is also owned by NYSE. Less than 5 percent of the average daily trading volume is in the United States, the company said.
The company said its depository receipts will continue to be traded on the over-the-counter market in the United States.
Ahold will continue to make financial disclosures to Dutch regulators, and its shares will trade on the Euronext Amsterdam exchange.
It is not uncommon for overseas companies to drop their listings from American exchanges, which have stricter standards than European markets, particularly since the 2002 adoption of the Sarbanes-Oxley Act, experts said. The law is designed to hold business executives more accountable in the wake of the Enron scandal.
"They view Sarbanes-Oxley and the listing requirements to be more costly and burdensome and find that it's not worth it," said Albert S. "Pete" Kyle, a professor of finance at the Robert H. Smith School of Business at the University of Maryland.
Ahold said it planned to give written notification to the NYSE of its intention to delist. The company also plans to file SEC documents regarding the delisting about Sept. 10. Ahold said the delisting will be effective 10 days after the filing. It also will file documents to remove its registration and to terminate its financial reporting obligations with the SEC once the shares are delisted. That would become effective 90 days after the filing, Ahold said.
In a separate announcement, Ahold said its second-quarter earnings increased on the sale of assets, including food distributor U.S. Foodservice in Columbia.
Net profit was $3 billion, up from $299 million during the corresponding quarter a year ago. Ahold sold U.S. Foodservice to two private equity firms last month for $7.1 billion.
Sales at the unit that includes Giant Food increased 1.9 percent to $3.94 million, compared with $3.87 million for the corresponding period a year ago.