Elliott Advisors, the US activist investor, has revealed a 3 per cent stake worth about $1bn in Europe’s largest supermarket group Ahold Delhaize in the latest example of private interest in grocery companies.
The hedge fund has pledged to support the carve-out of Amsterdam-listed Ahold’s online marketplace business Bol.com, the biggest ecommerce company in Belgium and the Netherlands.
The Dutch grocer revealed earlier this week its intention to explore floating Bol.com in Amsterdam, although it will retain a controlling interest.
Well known for challenging company managements, Elliott’s stance towards Ahold is generally supportive.
The stake of the US group, which is currently lobbying to oust the boss of UK drugmaker GlaxoSmithKline and waged a long battle against Akzo Nobel after the paint-maker rejected a takeover bid, “reflects its strong conviction in the quality and prospects” of the Dutch company, Elliott said.
The investment, a mixture of directly held equity and derivative instruments, also reflects Elliott’s belief in the “strength and potential” of Bol.com.
Although supermarkets are typically slow growing and low margin, they generate substantial free cash flows, which have attracted interest from a variety of private groups.
In the UK, private equity groups have taken over two of the four largest supermarkets this year, while Vesa Equity, the investment vehicle of Czech billionaire Daniel Kretinsky, has amassed a 10 per cent stake in J Sainsbury and attempted to buy German wholesaler Metro in 2019.
Frans Muller, Ahold’s chief executive, referring to a separate listing for Bol.com in Amsterdam at an investor day, said it created direct access to capital to fund the online marketplace’s accelerated growth strategy.
It also expanded its strategic partnership and collaboration with other Ahold brands in the Benelux region, he said.
Elliott said it agreed that a float “should help unlock significant value for shareholders, thus far concealed within the company’s structure”.
“A more independent Bol.com would be a stronger business with a more robust marketplace”.
Ahold is the biggest supermarket group in Europe by market capitalisation, generating about three-fifths of its sales in the US, while Bol.com is the largest ecommerce group in Belgium and the Netherlands by transaction value ahead of Coolblue, another local rival, and Amazon.
Bol.com started out as an online bookstore in 1999 and now sells a mixture of own-bought and third-party products. Ahold expects it to generate gross merchandise of €5.5bn this year.
Ahold does not disclose Bol’s revenues, but analyst William Woods at Bernstein predicts total sales of €2.6bn in the current financial year, of which €2.2bn will come from own-bought stock and the remainder as commission on third-party sales.
Allegro, a pure marketplace business, floated in Warsaw last year with a market value of 17 times its annual sales.
However, Woods said he was wary of valuing Bol.com at a high multiple due to the competitive threat from Amazon and its narrow geographical focus on the Benelux region, a relatively mature market.
Allegro shares surged immediately after listing but have since fallen back to around their initial public offering price. Online fashion retailer Zalando also operates a mixture of marketplace and own-bought sales channels and trades at about 2.5 times its annual sales.