Ahold sells off Bi-Lo

Ahold is selling off Bi-Lo and Bruno's, and trying to sell Tops. I guess their strategy of buying up regional grocery chains didn't work so well.

WSJ.com - Ahold
Sells Units:
Dutch retailer Ahold NV said it is selling its U.S.-based food retail operators Bi-Lo and Bruno's to a private investment fund for a total of as much as $660 million.

The sale to an affiliate of U.S.-based Lone Star Funds keeps Ahold on track with its €2.5 billion ($3.3 billion) divestment program, with which it seeks to regain investment-grade status in 2005 and further reduce debt. Following an accounting scandal that erupted in February 2003, Ahold almost went bankrupt and its shares lost 60% of their value. The company was saved by an emergency credit line.

The closing of the deal is expected in the first quarter of 2005, when Ahold will receive $560 million in cash. Within 18 months of the deal closure, it will be entitled to the balance of as much as $100 million if Bi-Lo and Bruno's achieve certain targets.

... the deal includes an undisclosed amount of debt in the form of capitalized lease obligations, analysts noted. Ahold's financial lease commitments stood at €2.3 billion and most of these leases are U.S.-related.

Bi-Lo, based in Mauldin, S.C., and Bruno's, of Birmingham, Ala., are two of the leading food retail chains in the Southeastern U.S., with a combined store count of more than 450 supermarkets and combined 2003 net sales of €4.7 billion.

"Divesting Bi-Lo and Bruno's is part of our strategy to optimize our portfolio and strengthen our financial position by reducing debt. Our U.S. retail business will be fully focused on our other prominent supermarket operations," Chief Executive Anders Moberg said. ... Tops Markets in the U.S. and supermarket chain G. Barbosa in Brazil are also for sale.