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Content Guy’s Note: Our friends at, because of their strong understanding of the European markets, are in a unique position to evaluate the ongoing travails at Royal Ahold.

The resignation of Ahold CEO Cees van der Hoeven comes as the result of a year full of bad news culminating this week with the highly destabilizing revelations of accounting irregularities. Following a disappointing and disaster-ridden year, the latest episode has effectively demolished confidence in the company‚s financial performance.

There is now a stark contrast between the operational strength of Ahold’s
international store network and its credibility in financial circles. It seems likely that Ahold will be forced into selling some of its assets to repay its debts (especially if lenders are pressured into demanding early repayment), and there will be no shortage of rivals such as Tesco, Carrefour and Wal-Mart willing to take advantage. More flamboyant speculators have suggested that buy-out specialists such as Kohlberg Kravis Roberts – itself now free of the Safeway saga in the UK - might be interested in picking up Ahold in its entirety. The fall in its stock price so far values the business at a bargain basement EUR3 billion. Despite this, we would be remarkably surprised if the entire business changes hands.

Ahold‚s ambitions to strengthen and expand its global empire are in effect frozen. The company has reiterated that it will follow its debt reduction program that focuses on organic growth and the divestment of non-core assets to free capital. After this week, however, Ahold might be forced to sell off far more precious assets than intended under the original program. In the event of lenders demanding early payback of loans, Ahold might find itself eyeing up the family silver.

Cees van der Hoeven‚s successor will be faced immediately with a very tall order. No names have been mentioned yet, but we expect Ahold to appoint someone from the outside who can give the company a renewed sense of credibility.

With the benefit of hindsight, it seems fair to say that the amount of acquisitions carried out under the reign of Cees van der Hoeven has given Ahold a severe case of indigestion. In its race to keep up with international development of the likes of Wal-Mart, Tesco, Carrefour, Delhaize etc, the business has bitten off more than it can chew. Ahold‚s ambition is beyond reproach, its execution obviously leaves something to be desired.

The moral of the story? Ahold has acquired around 50 businesses over the
last decade. If you buy that many closets, you inherit a couple of
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