Food Lion and Giant’s European owners plan to merge

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Food lionThe Belgian and Dutch companies that operate Food Lion and Giant stores in the United States plan to merge. The merger had been rumored for months.

The $29 billion stock merger of Ahold (Giant) and Delhaize (Food Lion) will give the combined company more than 6,500 stores with 375,000 associates as well as 50 million customers.

CEOs of the two companies cited similar corporate cultures and cost savings as strong arguments for the deal.

Ahold’s stores, which include Giant, Martin’s and Stop and Shop are located on the East Coast, while the smaller Food Lion markets are clustered in the Mid-Atlantic and South. The two companies get about half of their sales from US holdings.

Savings from the deal would total 500 million euros or about $560 million a year, in efficiencies, according to a release.

Both Ahold and Delhaize have struggled, at times, in the US, with competitors like Wal-Mart, Whole Foods, Aldi, Trader Joe’s, Costco and Wegmans moving into their core markets.

Wegmans is now opening stores in Pennsylvania, New England and the Washington, D.C. area, all strongholds for Ahold.

And in a world filled with online rankings, Ahold and Delhaize have rarely  broken into the ranks of the highest rated supermarket chains. Food Lion, in particular, has struggled in consumer ratings.

 Delhaize, which operates smaller supermarkets, has expanded and pulled back in various markets, including Philadelphia where it opened and shut down  Bottom Dollar stores.

Food Lion  has expanded in Delaware, apparently profiting off the decline of long-time market leader Acme. Northern Delaware has also seen an expansion by Shoprite. Delaware stores are owned by the community-minded Kenny family.

In central and southern Delaware, Food Lion is seeing competition from employee-owned Redner’s stores in Dover, Milford and other locations.

Giant in Delaware has remained stable, but has not added stores.

Ahold actually operates two separate Giants, one based in Pennsylvania and the other in the Washington, D.C. area.

Giant stores in Delaware are ringed by smaller Food Lion stores, perhaps creating a dilemma for the combined companies. In terms of picking up efficiencies.

Giant also operates the Stop and Shop chain, which extends from New Jersey to New England. Delaware Giant stores are part of the Washington, D.C.-area giants after earlier indicators that the stores might migrate over to Stop and Stop.

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