Report of the Corporate Executive Board
Ahold and Europe
The scheduled disappearance of Europe's internal boundaries after 1992 will
greatly affect consumers, suppliers and retailers. The introduction of new prod
ucts, the concentration of means of production and the unrestricted transport of
goods all demand careful preparations. Ahold has recognized this challenge and
responded to it. In 1989, this led to the formation of the European Retail Alliance sc
(ERA) and the expansion of AMS Marketing Service ag.
ERA, with its head office in Brussels, was co-founded by Ahold, the Argyll Group of
London (United Kingdom) and Groupe Casino of Saint-Etienne (France). The object of
ERA is to foster cooperation among the partners in the fields of marketing, distribution,
production, management development, designing and utilizing store formulas and
developing management information systems. Each of the three partners has an equal
interest in ERA. The chairmanship of the alliance will be held by each partner in rota
tion.
Early in November the ties between the partners were strengthened with the
exchange of cross-participations in each other's share capital. The companies each
issued new shares worth 100 million ECU (about 120 million) at prevailing market
values. Each partner then placed its newly issued shares evenly with the other two part
ners. As a result, Ahold received 1.6% of Argyll's issued share capital and 4% of Casino's
issued share capital, while the two other partners each acquired a 3.8% interest in
Ahold's issued common share capital.
Parallel to ERA is AMS, which is engaged in organizing and supervising synergy
marketing, a term which denotes active cooperation between retailer and manufacturer
to reduce production and distribution costs. In just a few short months, AMS has estab
lished a broad base across Europe: in addition to the three ERA partners, the following
companies are also involved in AMS: Dansk Supermarked indkob a/s (Denmark), ICA
Aktiebolag (Sweden), La Rinascente S.p.A. (Italy), Migros Genossenschaft-Bund (Swit
zerland), Kesko Oy (Finland) and Mercadona S.A. (Spain).
AMS Marketing Service ag, with its head office in Zug (Switzerland), was founded by
Ahold in 1988 as Ahold Marketing Services ag. The name and ownership ratios have
been adjusted. ERA holds a 60% interest in AMS, with the remaining shares equally
divided among the other AMS partners. The first tangible results of the new venture are
expected to materialize in the course of 1990.
In the course of the search for a partner in West Germany, negotiations were under
taken with Asko Deutsche Kaufhaus AG of Saarbriicken, but these were broken off
when it was learned that, without prior consultations, Asko had acquired a considerable
block of Ahold shares. This action was considered undesirable by Ahold's Board and by
the 'Stichting Ahold Continuïteit', since it constituted a threat to Ahold's ability to take
important decisions independently. Accordingly, at the end of August the Board of the
'Stichting' decided to exercise its option partially by acquiring 107,130 Ahold preferred
shares. The 'Stichting' has stated that it will retain the preferred shares for as long as
necessary to fulfill its mission: promoting the continuity and distinct identity of Ahold in
the interest of all parties involved.
In 1989, Asko brought summary proceedings against Ahold seeking to force its
admission to ERA and AMS. This attempt was rejected by the courts. Subsequently,
Asko brought a legal action against Ahold and the 'Stichting' disputing the validity of
the preferred stock acquired by the 'Stichting'. We are fully confident of a judgment in
our favor in these proceedings, as well.
11
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Richard Bogomolny (I) and
Bill Holsworth in the new
Finast Superstore in Cleveland
