Tesco, the leading UK supermarket group, could make major inroads into the Continental European market with the acquisition of part of the Ahold empire, according to reports in the British press this weekend.
The Independent on Sunday newspaper reported that Tesco was considering making a bid for Ahold, the Dutch group which last month shocked the markets with revelations of accounting irregularities at its US Foodservice unit.
Ahold has been hit by a number of problems over the last year - mostly related to its businesses in Latin America, which were massively impacted by exchange rate problems - and has already begun disposing of most of its non-core business. But the accounting scandal could force the company to sell off more than just these marginal businesses, and that could be where Tesco would profit.
Tesco and Ahold's businesses overlap in a number of markets, most notably in Eastern Europe and the Far East, and these units would clearly be of most interest for the UK number one.
Ahold has 115 stores in Poland and 173 in the Czech Republic, both markets where Tesco is a strong player, and also runs joint venture retail operations in Thailand and Malaysia, which could be of interest to Tesco as well. Ahold's business in the US could also tempt Tesco, the report suggested.
At present, of course, Ahold has no plans to sell any of its units apart from those which have already been announced, but the continued financial turbulence at the company could force its hand. The sharp decline in the company's share price since the revelations also leave it vulnerable to hostile takeover bids.
The question is whether Ahold's operations in western Europe will come onto the market - such as its domestic business or its expansive Spanish operations. The company just last week denied that it had plans to sell off its Spanish business - though there would be no lack of potential buyers for that, including probably Tesco but also companies which are already players in Spain such as Carrefour or Auchan.
If Tesco were to bid for parts of the Ahold empire, it would mean that it would have to scrap plans for a takeover of British rival Safeway - a move which is unlikely to worry it too much since the chances of Tesco ending up with more than a handful of Safeway stores are slim in any case.