Ahold seeking closure for Lat Am sell offs
have been stalled for some time by delays in the core markets of
Brazil and Argentina - but this could soon be about to change.
In Argentina, Ahold has made two unsuccessful attempts to sell its Disco retail business in the last few months. Last year it announced that Chilean group Cencosud was to buy the business but failed to reach an agreement, leaving the door open for a new offer from local retail entrepreneur Francisco de Narvaez and France's Casino Group.
But earlier this year it again revealed that an agreement could not be reached, forcing it to delay the sale once again.
But now the Dutch group has decided to hit directly at the root of the problem. Disco was previously run by Ahold via a joint venture with a company called Velox, and two disgruntled Uruguayans are now attempting to hold Ahold liable for losses they and other savers incurred after investing in two banks owned by the collapsed Velox group.
Not surprisingly, the possibility of being landed with a huge compensation bill has not been a particularly attractive prospect for potential buyers for Disco, and Ahold is now keen to put an end to the uncertainty.
Ahold has now accused the two Uruguayans of "scandalous" accusations and has instigated legal proceedings against them on charges of "private violence".
The group has consistently maintained that its business with Velox was in no way related to the banks in question. "Ahold had not even the smallest relationship with these banks," the company said in a statement. "The only link was that Ahold agreed with the Velox Group in 1998 to acquire a majority of the shares in the supermarket joint venture Disco Ahold International Holdings. This joint venture, of which Velox Retail Holdings was a member until 2002, had no relation at all with the banking business of the Velox Group."
The Dutch retailer added that it had in fact been as much of a victim of the collapse of the Velox group as the Uruguayan investors, with losses of hundreds of millions of dollars.
The retailer said that the persistent attempts of the Uruguayan investors to implicate Ahold in the case - despite no evidence linking it to Velox' banking arm - had led to the impression that they ahd somehow managed to obtain a court order blocking the sale of Velox' assets - including Disco - and that this had obviously been a major sticking point in the sale negotiations.
"Ahold has signalled repeatedly that the actions against it are unfounded and frivolous, and that at the right opportunity it will initiate pending legal actions to recover the significant damages and economic losses that were caused by the expectation that it would be forced to assume debts unrelated to Ahold," the statement added.
But if the Argentine disposal looks set to be delayed for some time to come, the finishing line appears to be in sight in Brazil, where Ahold is selling its Bompreco and G Barbosa businesses.
Delays here were caused mainly by a lengthy investigation by Cade, the Brazilian competition authority, and subsequently by Cade's ruling that the two businesses had to be sold to different buyers.
But press reports today suggest that giant US group Wal-Mart could finalise the acquisition of the 119-store Bompreco chain in the very near future, presumably leaving the other interested party, local player CBD and its foreign partner Casino, to snap up the smaller G Barbosa group.
Ahold needs to draw a line under its Latin American businesses as quickly as possible, not least because it is also planning the sale of its Spanish stores this year and needs to concentrate on that market. But perhaps even more urgent is the need for Ahold to see some stability after a lengthy period of upheaval caused by restructuring and revelations of accounting fraud.
Withdrawing from Latin America and Spain will not only boost Ahold's cash reserves, it will also allow it to concentrate on its core units in Asia, the US and eastern Europe - and hopefully to restore consumer and investor confidence.
