AHOLD: STRONG INTEREST IN BIDDING FOR BI-LO, BRUNO'S

Mark Hamstra

ZAANDAM, Netherlands -- Ahold here has seen "stronger than expected interest" in its Bi-Lo and Bruno's chains in the United States and is confident that it will meet its target price in selling those and other assets, the company's chief executive officer said last week.

In an interview with European newswire services, Anders Moberg said Ahold expected to meet its target of raising 2.5 billion euros, or about $3 billion, from the sale of those two chains in the Southeastern United States, Superdiplo in Spain and its Asian and South American operations. The funds are being used to pay down debt in the wake of the company's accounting scandal last year, primarily at its U.S. Foodservice division.

Moberg also said the company was committed to growing in Poland, the Czech Republic and Slovakia, where it already has a presence.

Bids on Superdiplo are due this week, while bids on Bi-Lo, based in Mauldin, S.C., and Bruno's, based in Birmingham, Ala., are due shortly afterward, an Ahold spokesman told SN last week.

"Our intention is to sell it as a unit," the spokesman said of Bruno's and Bi-Lo's, which operate in contiguous markets in the Southeast. "The value is much higher as a unit, and it's an attractive option for a prospective buyer."

Moberg, however, suggested that the company might have to break up the chains into groups of stores.

Companies thought by analysts to be interested in buying all or parts of Bruno and Bi-Lo's include Kroger, Cincinnati; Publix Super Markets, Lakeland, Fla.; and Delhaize America, Salisbury, N.C.

Bi-Lo operates 292 stores in South Carolina, North Carolina, Georgia and Tennessee, and had 2003 sales of $3.2 billion. Bruno's operates 178 stores in Alabama, Florida, Georgia and Mississippi and had 2003 sales of $1.78 billion.

Moberg suggested that additional rounds of bidding could follow.

Analysts said Moberg's comments were encouraging. However, the analysts also said their enthusiasm is tempered by the possibility that Ahold could be required to exercise an option to acquire a larger stake in its Scandinavian division, which they said could eat up some of the proceeds from the asset sales.

"A big part of these funds are going to be gotten from these disposals," said Didier Rabattu, an analyst in the London office of Deutsche Bank.

Patrick Roquas, analyst, Kempen Securities, Amsterdam, said Moberg's comments confirmed what analysts had been forecasting, but he noted that Ahold has not yet identified any specific transactions in the Bi-Lo, Bruno's and Superdiplo banners.

"The really good news would be if they announced the disposal for a really good price," he said.

Rabattu said he estimated that Bi-Lo and Bruno's could fetch about 10% to 15% of their annual sales, or about $500 million to $750 million in total, while he expected Superdiplo to bring in about $600 million to $660 million.

"The asset disposals are going to help," he said. "That's going to give them a little bit more room to maneuver."