Delhaize Acquires Delta Maxi Group

Delhaize Group, the Brussels-based retail conglomerate, has entered into an agreement to acquire 100 percent of the Serbian retail company Delta Maxi Group, which operates about 450 stores in five southeastern European countries. Combined with its existing operations in Greece and Romania, the Delta Maxi acquisition will make Delhaize a leading retailer in southeastern Europe, according to the company.

Delhaize president and CEO Pierre-Olivier Beckers noted that the transaction “fully supports the acceleration of our sales growth rate, a key priority of our New Game Plan.” He added: “We foresee significant revenue growth and synergies potential from integrating these new markets in our existing European business. The southeast of Europe continues to be a very promising region in terms of economic and consumer spending growth, both supporting the rollout of modern retailing. In 2011, we will be well positioned to capture these growth opportunities as our operations in seven southeastern European countries together are expected to generate revenues of approximately 3.4 billion euros and to cover a network of more than 800 stores. This transaction is an important step in rebalancing our geographic portfolio between our U.S, European and Asian operations.”

“We have a lot of respect for what Delta Maxi Group has achieved over the last decade,” said Kostas Macheras, EVP of Delhaize and CEO of southeastern Europe. “We are particularly impressed with the strength of the brands of Delta Maxi Group, the level of execution and innovation in the stores, the breadth of the store network, and the talent of Delta Maxi management teams. … Delta Maxi’s millions of customers can count on us to continue the first-class service they have been enjoying in their favorite stores. Additionally, Delta Maxi Group customers will be able to benefit from our operating companies’ expertise in assortment and merchandising.”

Belgrade-based Delta Maxi began operations in 2000. Today, the group has stores in Serbia, Bulgaria, Bosnia and Herzegovina, Montenegro and Albania. The company is the largest food retailer in Serbia, with around 350 stores, also holds important positions in Bulgaria, Bosnia and Herzegovina, Albania and Montenegro.

The company’s network consists mainly of four food retail formats: convenience stores under the Mini Maxi, Piccadilly Express and Euromax banners; supermarkets under the Maxi, Piccadilly and Euromax banners; Tempo Express discount stores; and Tempo hypermarkets. Delta Maxi employs about 15 000 associates at its markets.

Under the terms of the agreement, Delhaize will acquire 100 percent of Delta Maxi for 932.5 million euros, including net debt of about 300 million euros. Delhaize expects the deal, including transaction costs, to be immediately earnings accretive as of 2011. The transaction includes the real estate ownership of more than half of the Serbian stores and seven Delta Maxi distribution centers.

As from the end of 2013, Delhaize anticipates realizing more than 16 million euros in net annual synergies, particularly from improved procurement, better inventory management, and optimized IT and supply chain systems and processes.

Subject to mutually agreed-upon and customary conditions, including necessary approvals, the transaction is expected to close in the third quarter of 2011.

Delhaize has retained Lazard, Bank of America Merrill Lynch and Raffeisenbank as financial advisors for the transaction. CMS in Brussels, London and Serbia, with assistance from other CMS offices and other local lawyers, is acting as Delhaize’s legal advisor.