Executive Summary

• Ahold and Delhaize’s merger is expected to close in mid-2016 creating one of the largest food retailers in the US and a major player in Europe.
• Ahold Delhaize will be the world’s ninth-biggest grocery retailer. In the US, it will move into fourth position, between third-place Albertsons and fifth-place Publix.
• In the US, the merger is another step in the consolidation of the grocery sector. The announcement of the merger followed the completion of the Albertsons-Safeway and Kroger-Harris Teeter mergers, and it preceded Kroger’s recent announcement of its plan to acquire local retailer Roundy’s.
• The companies estimate that they will generate €500 million in cost savings. This will equate to a boost of roughly 100 basis points to the combined operating margin, based on our estimates, which is significant given the low single digit operating margins the companies generate.
• We see the merged company as one that will be more capable of responding to changing consumer demands—for convenience, for home delivery and for healthier foods—than the constituent firms are independently.