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Reuters reports that company insiders tell it that while Dutch food retailer Ahold will eventually seek a merger partner, it first will look to cut assets, reduce debt, and rebuild investor confidence in the company.

Ahold has been rocked lately, with the resignations of its CEO and CFO and the revelations that it overstated profits by a half-billion dollars over a two-year period in its US Foodservice division.

However, a “fire sale” of assets is not expected. South American stores are up for sale, but no decision apparently has been reached about other operations. There are consistent rumors that troubled US Foodservice will go on the sales block, but the company may not be willing to sell an asset with such sharply reduced value. The rest of Ahold’s US operations are considered safe, as are the Dutch businesses, but everything else is considered vulnerable to possible sale.

Ahold shares have fallen more than 65 percent in the past two months.
KC's View:
This is such a cautionary tale. Ahold was once proud, respected and aggressive…even arrogant about its potential growth. Now, even before pieces of the company are spun off, it seems just a ghost of itself.

One important note here, though. Ahold makes a point about investor confidence, and that’s a big deal. Consumer confidence is something else -- and from what we can tell, there is very little consumer reaction to the financial mismanagement at Ahold, at least not here in the US.

That would seem to speak volumes about at least one part of Ahold’s business…though it wouldn’t take much for the wheels to come off that particular wagon.