Elliott Takes Stake in Stop & Shop Owner Ahold Delhaize

(Bloomberg) -- Elliott Investment Management LP has built a stake in Stop & Shop owner Royal Ahold Delhaize NV, as the activist firm joins other investors taking aim at the resurgent European supermarket business. 

The U.S. firm, which is run by billionaire Paul Singer, holds more than 3% of the company, according to a statement Wednesday. Elliott said the move reflects support for a recent decision to potentially separate Ahold’s Dutch online unit Bol.com as the pandemic-fueled boom in e-commerce attracts investors’ interest.

“A more independent bol.com would be a stronger business with a more robust marketplace,” Elliott said, praising Ahold’s “quality and prospects.” 

Ahold shares rose as much as 4.2% in Amsterdam. The company has a market value of 31.2 billion euros ($35.3 billion) so a 3% stake would be worth more than $1 billion. 

Elliott has become known for protracted battles with the managers of companies in which it invests, with the firm demanding strategy changes, governance overhauls or divestments in the hopes of boosting shareholder value. In this case, the friendly tone of the statement suggests Elliott sees Ahold executives as open to change.

“We welcome a constructive dialogue with all of our shareholders and we value their input,” an Ahold spokesperson said. The company was unable to immediately confirm whether there have been meetings between Ahold and Elliott executives. 

Supermarket Deals

Ahold Delhaize was formed by a merger of the largest supermarket operators in Belgium and the Netherlands in 2016, at the start of what has been a busy few years for consolidation in Europe. 

The pandemic has boosted grocers’ sales across Europe as people eat more meals at home and shop more online. The industry is now attracting widespread investor interest. Most recently Asda and Wm Morrison Supermarkets Plc, Britain’s third- and fourth-largest supermarkets, were taken over by U.S. and U.K. private equity firms. Czech billionaire Daniel Kretinsky’s Vesa Equity Investment has built up a large stake in J Sainsbury Plc in a move that has sparked speculation about the future of Britain’s second-largest grocer. 

In France, Carrefour SA has attracted unsuccessful takeover approaches from Canada’s Alimentation Couche-Tard Inc. and rival Auchan. 

Ahold this week announced it was considering an initial public offering of Bol.com, a website it bought in 2012 for 350 million euros ($396 million). Bol.com started out as Europe’s first online bookstore in 1999 but now sells a wide range of general merchandise products. The platform aims to double its business by 2025 and keep a market-leading position in the Netherlands, where it’s bigger than Amazon.com Inc. 

Bol.com Stake

Ahold Chief Executive Officer Frans Muller said the company plans to keep a small stake in Bol.com, with the deal providing funding for the grocer’s growth. 

Last week, Ahold raised its earnings forecast for the second time this year as the grocer’s sales and profit beat estimates despite pandemic-related cost pressures. Underlying earnings per share are now expected to grow by a low-to mid-20s percentage range when compared with 2019. 

Elliott’s move follows the disclosure of a stake in German auto parts maker Hella GmbH & Co. earlier this week. The firm’s other European holdings include an investment in GlaxoSmithKline Plc. The activist also recently confirmed a stake in Healthcare Trust of America Inc.  

©2021 Bloomberg L.P.