Tuesday, February 02, 1999
Royal Ahold, the food retailer, has acquired another two regional supermarket companies in large Spanish cities. Agreements have been signed for Castillo del Barrio in Malaga and Guerrero in Granada. The acquisitions enable Ahold to add some 30 stores and sales of E 52.3 million (USD 58 million) to its Spanish operations, which now total almost 180 stores and sales of almost E 454.5 million (USD 0.5 billion). Ahold intends to grow considerably in this market.
Growth strategy in Spain
In January, Ahold announced the acquisition of Dialco and Dumaya, two prominent supermarket companies located in southern Spain. Rapid growth through the acquisition of existing supermarket companies is fully in line with Ahold's strategy to build a prominent position in Spain. Acquisition candidates and cooperation opportunities are available in Spain, reflecting the desire of family businesses to join forces with an international company able to use its scale and know-how to build a sustainable competitive advantage.
Guerrero market leader in Granada
Guerrero operates 20 supermarkets and one cash & carry in Granada and has its own distribution center. Its activities generate annualized sales of E 41 million (USD 45 million). Guerrero is market leader in this historic Spanish city, a relatively prosperous community. The supermarkets have an average selling space of 5,000 sq.ft. (500 sq.m.) and are popular with consumers for their assortment of fresh products, largely sold in front of the supermarket according to local custom. The Guerrero chain has considerable growth opportunities.
Castillo del Barrio
Castillo del Barrio is a small chain of seven supermarkets in Malaga with annualized sales of E 11.4 million (USD 12 million). The stores have an average selling space of 5,000 sq.ft. (500 sq.m.) and feature excellent service departments. Dumaya, the supermarket company Ahold acquired in January, is market leader in Malaga. In due course, the Castillo del Barrio supermarkets will be integrated into Dumaya.
Dialco and Dumaya
Dumaya and Dialco, the two prominent supermarket companies Ahold acquired last month, generate joint sales of E 295 million (USD 325 million) in their 130 stores. Ahold had earlier established a position in the Madrid market and currently operates 17 profitable supermarkets under the Longinos Velasco store brand. The 100 supermarkets operated by Dialco, in Andalusia, enjoy a strong reputation for customer service and generate sales of E 225 million (USD 250 million). Dumaya operates 30 supermarkets and five cash & carry's in and around Malaga and in Ceuta, the Spanish enclave on the Moroccan coast. Dumaya is market leader in both areas with sales of E 70 million (USD 75 million).
Comments by Ahold Board member Jan Andreae
Jan Andreae, a member of Ahold's Corporate Executive Board, said in a statement: 'Our Spanish operations are now taking off rapidly. We will be generating sales this year of approximately USD 500 million and plan considerable further growth. We want to acquire supermarkets in densely populated cities and areas, where customers appreciate shopping in modern supermarkets. The consolidation process is in full swing and Ahold sees excellent opportunities. Regional and local supermarket companies want to join forces with us for our international know-how and sizeable network. We plan to build a competitive group of prominent and profitable supermarket companies meeting the needs of the Spanish customer.'