Amsterdam/Brussels: Dutch retailer Ahold is looking at selling its stake in Swedish grocer ICA in a move that could raise over 2 billion euros (Dh9.4 billion or $2.5 billion) and adds to a growing list of European store groups retrenching in a tough economic backdrop.
Ahold, which makes most of its sales in the US and runs market-leading Dutch grocer Albert Heijn, said it was exploring options for its 60 per cent stake in ICA, including a possible flotation on Sweden’s stock exchange.
Analysts have long speculated Ahold might sell out of ICA because, although it has a 60 per cent economic interest in the business, it only has 50 per cent of the voting rights and has to share control with Swedish retail investment group Hakon Invest, which owns the remaining 40 per cent stake.
Ahold could use the proceeds to make acquisitions in its main US market or return cash to shareholders, analysts said.
Several major European retailers have announced plans in recent days to streamline their operations, as they focus on protecting their main markets at a time when austerity-hit shoppers are reluctant to spend.
Carrefour, Europe’s biggest retailer, said last week its businesses in Turkey and Indonesia were under review, while sources familiar with the matter said Germany’s Metro was in talks to sell its Real supermarket stores outside its home market.
An Ahold spokesman said the possible divestment of ICA was not linked to the Eurozone debt crisis.
ICA operates in Sweden, Norway and in the Baltic countries, and made an operating profit of 2.5 billion Swedish crowns ($373 million) on sales of 95.2 billion Swedish crowns in 2011.
Based on multiples of 6.6-7.5 times earnings before interest, tax, depreciation and amortisation (EBITDA), Ahold’s stake could be worth 2.1-2.4 billion euros, SNS securities analyst Richard Withagen said, adding he would expect Ahold to return part of the proceeds to shareholders.
“Those multiples are in line with what you pay for other supermarkets in Europe,” he said, adding it was not clear what ICA’s real estate and sluggish Norwegian business were worth.
ABN Amro analyst Robert-Jan Vos welcomed the planned divestment, saying the existing power-sharing arrangement was not ideal, and expected a sale to yield about 2 billion euros for Ahold.
Ahold said its review of ICA would take six to 12 months during which it would continue to work with Hakon on growing the business.
Hakon said it would not sell its stake in ICA. Ahold also has a non-controlling stake in Portuguese retailer JMR, the operator of the Pingo Doce supermarkets, which it unsuccessfully put up for sale in late 2006.
Ahold made 1.3 billion euros ($1.6 billion) in operating profit last year on sales of 30.3 billion euros.