AHOLD MAY DIVEST FOR ACQUISITION NOD

RUSSELL REDMAN

ZAANDAM, Netherlands -- Ahold here said it may divest up to 32 supermarkets in gaining federal and state approval for its acquisition of Stop & Shop Cos., Quincy, Mass., slated to close by the end of next month.

The company also extended the period of its tender offer for Stop & Shop shares 14 days to June 28. The extension was made to give the Federal Trade Commission and the Rhode Island, Connecticut and Massachusetts attorney generals more time to review the $2.9 billion deal. Ahold plans to finance the acquisition through a global offering of shares, the amount of which is slated to be disclosed this week.

Ahold said it still is in talks with the FTC and the state attorney generals on terms and conditions -- including store divestitures -- for antitrust approval of the transaction. Ahold expects that it soon will be able to enter into a preliminary consent decree or order that will allow it to buy the remaining Stop & Shop shares under the tender offer by July 31.

"While the number of stores to be divested and the conditions for divestiture have not been agreed with the various staffs, Ahold does not expect such number to exceed 32," Ahold said in a statement.

Jan Hol, an Ahold spokesman, declined to disclose which of the company's stores might be divested. However, industry observers told SN most of the stores to be divested likely would be Edwards Super Food Stores, plus some Stop & Shops.

"It's going to be some combination," said Chuck Cerankosky, an analyst at Hancock Institutional Equity Services, Cleveland. Windsor Locks, Conn.-based Edwards and Stop & Shop both have stores in Massachusetts, Connecticut, Rhode Island and metro New York.

"[Ahold's] goal would be to sell the stores to independents. They're required by the FTC to divest stores, which would probably have to remain supermarkets. In some cases, they might have to sell them as a group, and obviously it's very hard to find an independent that can afford to buy a group of stores," one observer said.

"Their goal would be to sell each individual store to an independent. But 32 stores would be a lot of transactions," she added.

A lot of independents would be interested in acquiring Edwards or Stop & Shop stores, another observer noted. "If you were Ahold, you'd probably look to take slightly less money for a store in giving it to somebody you don't think is going to cause you a problem in the long-term, rather than giving it to your best competitor -- even though you might get more money for it that way," he explained.

"Most of these stores are where Stop & Shop and Edwards overlap, and that's mostly in Connecticut," he said. Asked by SN which chains might be interested in acquiring stores Ahold would divest, observers cited A&P, Montvale, N.J.; Big Y Foods, Springfield, Mass.; Shaw's Supermarkets, East Bridgewater, Mass.; and, to a lesser degree, Price Chopper Supermarkets, Schenectady, N.Y.; Pathmark Stores, Woodbridge, N.J.; Grand Union, Wayne, N.J.; and Wakefern Food Corp., Elizabeth, N.J.

"Potential buyers may actually be restricted by the FTC because some of these stores [to be divested] may have a big overlap with a potential buyer. So there might be stipulations on who can buy individual stores or packages of stores," Cerankosky noted.