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Ahold Delhaize’s Acquisition of Profi Rom Food SRL: A Guide to the Prominent Grocery Retailer in Romania

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Ahold Delhaize’s Acquisition of Profi Rom Food SRL: A Guide to the Prominent Grocery Retailer in Romania

 

Ahold Delhaize is delighted to announce its agreement to acquire 100% of the Romanian grocery retailer Profi Rom Food SRL (Profi) from MidEuropa, pending approval from regulatory authorities. This acquisition represents a strategic move that aligns well with Ahold Delhaize’s existing local brand, Mega Image, creating a strong format fit and complementary customer proposition in the Romanian market.

Romania, with its robust economic fundamentals, is an attractive market experiencing continuous growth in public wealth and spending power.

Strategic Rationale: Profi is a leading traditional grocery retailer in Romania, boasting 1,654 stores nationwide, known for its robust product assortment and customer value. In the twelve months ending June 2023, Profi generated €2.5 billion in sales.

This acquisition will significantly expand Ahold Delhaize’s presence in Romania, doubling the size of its existing business under the Mega Image brand, which currently operates 969 stores, primarily in urban areas.

The combination of Profi and Mega Image will enhance Ahold Delhaize’s reach, serving both urban and rural areas effectively. The strategic fit and complementary customer propositions between these brands will enhance the shopping experience for Romanian consumers, driving sales growth and profitability.

Transaction Details: Ahold Delhaize anticipates substantial revenue growth and synergies resulting from this transaction, with a direct benefit to Romanian customers through improvements in the customer value proposition, digitalization, ESG (Environmental, Social, and Governance), and the Employer Value Proposition.

The enterprise value to be paid by Ahold Delhaize is approximately €1.3 billion, corresponding to a lease-adjusted enterprise value of €1.8 billion (post IFRS 16). The merger with Profi is expected to be accretive in terms of sales growth and EBIT margin (post synergies and integration) to Ahold Delhaize Europe, and EPS accretive to Ahold Delhaize, all within the first year following the closing of the transaction.

The acquisition consideration will be 100% debt-funded, and the transaction is expected to close in 2024, subject to customary closing conditions, including regulatory clearance.

Frans Muller, Ahold Delhaize’s Chief Executive Officer, expressed his excitement, stating, “I am very excited to welcome Profi into the Ahold Delhaize family. We have followed the company’s trajectory for a while now and admire what the Profi team has been able to achieve. I strongly believe that Profi has an exciting growth pathway ahead, and look forward to partnering with the team to further solidify our presence in Central and Southern Europe.”

Wouter Kolk, Chief Executive Officer of Ahold Delhaize Europe & Indonesia, extended a warm welcome to the Profi team, emphasizing the fortification of their position in Central and Southern Europe. He added, “Both Mega Image and Profi have been serving Romanian customers successfully in the past decades, which translated into increased loyalty and growth. By joining our family, the combination will benefit from our European best practices in the fields of digitalization, sourcing, extended local assortment, infrastructure, and sustainability. I am excited for the journey ahead.”

Next Steps: The completion of the transaction is contingent on meeting conditions, including obtaining clearance under applicable competition laws and regulations. The closing is expected in 2024.

This transaction will not have a significant impact on ongoing capital allocation and capital return policies, nor will it limit the balance sheet capacity to pursue further acquisition opportunities. Additional details will be provided during the Q3 2023 Ahold Delhaize analyst conference call.

Financial advisory services for Ahold Delhaize were provided by BofA Securities and Goldman Sachs, while CMS and GNP Guia Naghi & Partners served as legal advisors.

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