Netherlands-based food retailer Ahold announced this morning that it has settled a shareholder lawsuit related to its 2003 accounting scandal for the equivalent of $1.1 billion (US).
The shareholders had accused the company of improperly inflating its sales in order to raise its stock price.
Ahold said that the settlement took care of the “last significant” civil case against it, that it “attempted to make fair restitution without endangering the continuity of the company or its business strategy for the coming years,” and that it avoided a potentially costly court case.
Analysts say that the settlement will force the company to avoid its stated goal of a five percent operating margin in 2006 and that questions remain about the viability of its strategy of consolidating US operations as well as not selling its scandal-plagued US Foodservice division.
The shareholders had accused the company of improperly inflating its sales in order to raise its stock price.
Ahold said that the settlement took care of the “last significant” civil case against it, that it “attempted to make fair restitution without endangering the continuity of the company or its business strategy for the coming years,” and that it avoided a potentially costly court case.
Analysts say that the settlement will force the company to avoid its stated goal of a five percent operating margin in 2006 and that questions remain about the viability of its strategy of consolidating US operations as well as not selling its scandal-plagued US Foodservice division.
- KC's View:
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There seems to be a sense among analysts that Ahold still has a lot to prove, and that there remain a fair number of people who are unconvinced that Ahold is doing anything other than cutting costs and doing damage control.
We’ll see.
