AHOLD SAID TO EYE MORE ACQUISITIONS

ELLIOT ZWIEBACH

WASHINGTON -- Ahold anticipates at least one more significant East Coast acquisition in the next 12 months and possibly a major acquisition in Europe as well, according to securities analysts.

The analysts were part of a dinner and reception sponsored here by Netherlands-based Ahold to review its operations. SN was precluded from the meeting, and Ahold officials could not be reached for comment last week.

Contacted after the event, several analysts told SN Cees van der Hoeven, Ahold's chairman, made it very clear that Ahold is still in the hunt for major merger partners.

In the United States, van der Hoeven was quoted as saying, Ahold sees several potential strategic acquisitions, although analysts said he was not specific. Among the companies suggested by analysts as potential takeover candidates for Ahold were Hannaford Bros., Scarborough, Maine; Wegmans Food Markets, Rochester, N.Y.; Harris Teeter, Charlotte, N.C.; Publix Super Markets, Lakeland, Fla.; and Giant Eagle, Pittsburgh.

Speaking about Europe, analysts told SN, van der Hoeven said Wal-Mart's pending acquisition of Asda in the United Kingdom could be a catalyst for further Euopean consolidation, with Ahold as a key player.

Ed Comeau, an analyst with Donaldson Lufkin & Jenrette, New York, told SN van der Hoeven's remarks seemed to indicate a shift in Ahold strategy. "Six months ago Ahold was saying it would take a breather after acquiring Giant Food and Pathmark, but events have changed, and it is now opening the door very wide for significant acquisition activity in the next 12 months, both in the U.S. and in Europe," he said.

Comeau said van der Hoeven was vague about specifics in the United States, "but he said opportunities are snowballing at a faster pace than anticipated and Ahold said it needs to be responsive to that.

"Cees said he sees a handful of good strategic acquisitions in the U.S. and in Europe. Although he didn't mention the name, he implied that Wal-Mart's move into the United Kingdom has shaken up everything over there.

"He made the point very clear that Ahold believes it is the acquirer of choice in Europe, and with the changing landscape, there are a landslide of companies seeking to discuss partnerships or acquisitions with Ahold."

Debra Levin, an analyst with Morgan Stanley Dean Witter, New York, said van der Hoeven referred to Wal-Mart as "the new cock in the henhouse" in Europe with its pending acquisition of United Kingdom-based Asda.

She also quoted van der Hoeven as saying Ahold is having "very general and exploratory talks" with various European players, with an acquisition possible within the next two years.

According to Gary Giblen, New York-based managing director for Banc of America Montgomery Securities, San Francisco, "The company stressed there are still a lot of acquisition candidates it is looking at, and it reiterated it would not do a deal that's dilutive to earnings after the first year -- though it left the impression it might alter that restriction for the right deal."

Chuck Cerankosky, an analyst with McDonald & Co., Cleveland, said van der Hoeven indicated that, as Ahold moves forward with acquisitions, it is likely to limit itself to companies east of the Mississippi.

However, some analysts told SN Ahold has considered potential acquisitions in other geographic areas, noting the company looked at Dominick's, Northlake, Ill., which was acquired late last year by Pleasanton, Calif.-based Safeway, and Fred Meyer, Inc., Portland, Ore., which Kroger Co., Cincinnati, acquired a few months ago.

All of Ahold's current U.S. holdings are along the Eastern seaboard, including Stop & Shop Cos., Quincy, Mass.; Tops Friendly Markets, Buffalo, N.Y.; Giant Food Stores, Carlisle, Pa.; Giant Food, Landover, Md., and Bi-Lo, Mauldin, S.C.

Ahold is currently in the process of acquiring Pathmark Stores, Carteret, N.J., in a deal expected to be completed at the end of 1999.

Giblen told SN it was his impression the meeting was intended to raise Ahold's stock price. "The stock has been uncharacteristically weak lately and the company wants investors to understand its longterm strategy so the stock will stay strong enough to help Ahold do additional acquisitions," he explained.

Although analysts said the meeting was primarily informational -- reviewing what Ahold is doing rather than its future plans -- Levin said Robert Tobin, president of Ahold USA, indicated the company expects to implement a restructuring of its supply chain in several phases over the next few years.

As analysts met privately with officials of each Ahold division after van der Hoeven's formal presentation, Giblen told SN he was struck by how sincerely management personnel from each chain praised Ahold management as a partner. "Several mentioned that management even rejected pre-merger spending plans because they were not aggressive enough," he said.

Comeau said he came away from the meeting impressed by Ahold's ability to integrate its companies.

Cerankosky told SN he was impressed "by how confident the company seems about integrating acquisitions.