Monday, October 25, 2004
Zaandam, The Netherlands, October 25, 2004 - Ahold today announced that it has reached final agreement with Canica AS on the purchase price of Canica’s 20% interest in the Scandinavian joint venture ICA AB. Ahold became obligated to buy Canica’s interest as a result of Canica’s exercise on July 12, 2004 of its put option under the existing Shareholders’ Agreement for the ICA AB joint venture.
The total purchase price, including premium, to be paid by Ahold for the 20% stake amounts to SEK 7.35 billion (approximately EUR 811 million). The purchase price was agreed between Ahold and Canica without having to resort to the independent valuation procedure provided for in the Shareholders’ Agreement. ICA Förbundet Invest AB, the other ICA AB joint venture partner, has agreed, as earlier announced on July 19, 2004, to purchase in cash from Ahold half of the Canica stake for SEK 2.89 billion (approximately EUR 318 million). After giving effect to these purchases, Ahold and ICA Förbundet will own 60% and 40%, respectively, of ICA AB. Closing of the transactions is expected before the end of November 2004.
As a result of the abovementioned agreement between Ahold and ICA Förbundet, Ahold will pay more per share to Canica than it will receive from ICA Förbundet, which will result in Ahold recording an expense of EUR 87 million in the third quarter of 2004 under Dutch GAAP. As part of that agreement, among other things, all put arrangements in the Shareholders’ Agreement will be abolished upon completion of the abovementioned transactions.
Extraordinary dividend of ICA AB
After the completion of the purchases of the Canica stake in ICA AB, Ahold and ICA Förbundet intend to cause ICA AB to pay an extraordinary dividend of SEK 5.5 billion (approximately EUR 606 million). This dividend will be paid to Ahold and ICA Förbundet in proportion to their final stake in ICA AB, respectively 60% and 40%. By doing this, both shareholders make use of the strong balance sheet of ICA AB. Ahold and ICA Förbundet intend to cause an extraordinary general meeting of shareholders of ICA AB to be held as soon as practicable after the completion of the purchases of ’ stake.
Financing
Ahold intends to use available cash to fund the purchase of Canica's shares. The funds that Ahold will receive as a result of the extraordinary dividend will be added to its cash balances, replenishing a portion of the cash it will pay to Canica. The total net liquidity impact for Ahold, for the share transactions and the receipt of the extraordinary dividend, will be a cash outflow of approximately EUR 129 million.
"We are very pleased with today's announcement. The agreement with Canica represents a significant step in Ahold's 'Road to Recovery' and concludes another issue that caused uncertainty for stakeholders," commented Ahold President and CEO Anders Moberg. "ICA is a strong and leading supermarket brand in Scandinavia. Today’s announcement also highlights the stable and healthy foundation and strengthened cooperation with which Ahold and ICA Förbundet will take the joint venture forward."