AHOLD TO LAUNCH OFFER FOR ALL PEAPOD SHARES

DAVID GHITELMAN

ZAANDAM, Netherlands -- Ahold here said last week it will launch a tender offer to acquire all the outstanding voting shares in Peapod, Chicago, its Internet-based shopping service.

Ahold, which currently holds a 58% stake in Peapod, said the $35 million transaction -- expected to close in third-quarter 2001 -- will result in Peapod becoming a wholly owned subsidiary of Ahold USA, Chantilly, Va.

Ahold said it will offer $2.15 per share for Peapod, and Peapod's stock, which had been trading last week in the $1.20 to $1.25 range rose to $2.12 by late last week.

In response to questions from SN, an Ahold spokesman said, "Peapod will continue to operate under its own existing brand, according the successful co-branding strategy 'Peapod by Giant' or 'Peapod by Stop & Shop.'

"For Peapod's customers, nothing will change."

Marc van Gelder, Peapod president and chief executive officer, told SN, "This is further confirmation that the bricks-and-clicks model is working. This is an evolution, a complete integration of bricks-and-clicks."

Industry analysts also said Ahold's desire to be the sole source of Peapod's financing and willingness to have Peapod's results reflected on its bottom line showed the Dutch retailer's confidence in the Internet grocer.

Bob Gallo, consultant, Management Horizons division, PricewaterhouseCoopers, Columbus, Ohio, told SN, "Ahold's decision to buy the rest of Peapod indicates it will have financial support going forward. It will permit them to develop without being dependent on financial markets."

Andrew Wolf, senior analyst, BB&T Capital Markets, Richmond, Va., told SN, "It's a vote of confidence. It's very clear that the industry is close to cracking the code on how to service customers using the Internet as a marketing tool."