Royal Ahold announced early this morning that it will sell off all of its South American operations in an attempt to relieve financial pressure and retire at least some of its $12 billion (US) debt.
The move will affect operations in Argentina, Brazil, Chile, Peru and Paraguay.
However, the company said it has no plans at the moment to divest its operations in Central America, where it has a joint venture that operates more than 275 supermarkets in Guatemala, Costa Rica, Honduras, El Salvador and Nicaragua.
It was just a week ago that Ahold reopened its internal probe into irregular transactions at its Argentine supermarket business, Disco, and decided to extend it to all of the company’s Latin American units.
“Although we intend to proceed expeditiously with our divestment plan, we are determined to maximize the value we receive for these operations and obtain the best possible result for all stakeholders,” Ahold board member Theo de Raad said in a statement.
Analysts believe that when complete, sales of its South American businesses could generate more than $500 million (US) for Ahold, which coincidentally is the amount of money that its US Foodservice division overestimated its profits by during a two-year period. However, there remain questions about the devaluation of South American currencies that could affect any sale price, as well as issues with Ahold’s bookkeeping procedures.
Dutch-owned Ahold already is in negotiations to sell its Chilean Santa Isabel chain to Cencosud. However, the company says it has not yet had discussions with any companies about acquiring the other chains.
It was just yesterday that Ahold’s Santa Isabel chain failed to post 2002 earnings on deadline, resulting in the Chilean government suspending the trading of its shares on the stock market there.
Subsequently, Santa Isabel posted a loss for 2002 of $47.4 million (US), compared to a loss last year of just $17.7 million (US). The company did not explain the 168 percent increase in losses.
There also are reports that Ahold is considering a pull-out from Malaysia, where it could sell its 41 stores there to Dairy Farm of Hong Kong.
The move will affect operations in Argentina, Brazil, Chile, Peru and Paraguay.
However, the company said it has no plans at the moment to divest its operations in Central America, where it has a joint venture that operates more than 275 supermarkets in Guatemala, Costa Rica, Honduras, El Salvador and Nicaragua.
It was just a week ago that Ahold reopened its internal probe into irregular transactions at its Argentine supermarket business, Disco, and decided to extend it to all of the company’s Latin American units.
“Although we intend to proceed expeditiously with our divestment plan, we are determined to maximize the value we receive for these operations and obtain the best possible result for all stakeholders,” Ahold board member Theo de Raad said in a statement.
Analysts believe that when complete, sales of its South American businesses could generate more than $500 million (US) for Ahold, which coincidentally is the amount of money that its US Foodservice division overestimated its profits by during a two-year period. However, there remain questions about the devaluation of South American currencies that could affect any sale price, as well as issues with Ahold’s bookkeeping procedures.
Dutch-owned Ahold already is in negotiations to sell its Chilean Santa Isabel chain to Cencosud. However, the company says it has not yet had discussions with any companies about acquiring the other chains.
It was just yesterday that Ahold’s Santa Isabel chain failed to post 2002 earnings on deadline, resulting in the Chilean government suspending the trading of its shares on the stock market there.
Subsequently, Santa Isabel posted a loss for 2002 of $47.4 million (US), compared to a loss last year of just $17.7 million (US). The company did not explain the 168 percent increase in losses.
There also are reports that Ahold is considering a pull-out from Malaysia, where it could sell its 41 stores there to Dairy Farm of Hong Kong.
- KC's View:
- The betting seems to be that Ahold will focus all of its attention on the Netherlands, Scandinavia, and the US -- and sell off almost everything else in order to get its house in order. That seems pretty logical to us, with the only fly in the ointment possibly being that there an awful lot of investigations and probes to get through before Ahold starts any sort of real recovery.
