30
Ahold Annual Report 2003
Financial Statements
169
may exercise its ICA Put Option pursuant to which Ahold is obligated to purchase the Option Shares for cash.
If the selling ICA Partner is exercising its ICA Put Option with respect to all of the ICA shares held by that ICA
Partner, Ahold also is obligated to offer to purchase all of the shares held by the non-selling ICA Partner on the
same terms and conditions as those applicable to the sale of the Option Shares. The ICA Put Option may be
exercised beginning on April 27, 2004.
If the ICA Put Option is exercised, Ahold and the selling ICA Partner must negotiate the price of the Option
Shares in good faith. If Ahold and the selling ICA Partner cannot agree on a price, the price will be determined
using a valuation procedure, which varies depending on the period in which the ICA Put Option is exercised, as
described in more detail below. If the ICA Put Option is exercised prior to April 27, 2005, the valuation of the Option
Shares (if the parties cannot agree to the price of the shares) will be performed by an independent valuation expert
jointly appointed by Ahold and the ICA Partners. The valuation procedure must use a formula equal to (a) the fair
market value of the Option Shares to be put to Ahold (as if the company was listed to the Stockholm Stock
Exchange, not including any control premium) at the time of exercise (the "Revised Equity Value") plus (b) an
amount equal to the product of (i) the Revised Equity Value and (ii) the Premium Rate (as described below).
The "Premium Rate" is the percentage equal to (x) the equity value for the ICA shares on which the price Ahold
paid to acquire its 50% interest in ICA was based divided by (y) the fair market value (also as if the company was
listed, not including any control premium or assumed future synergies resulting from the acquisition) of the ICA
shares on December 9, 1999 (the date of the heads of agreement relating to the purchase of the ICA shares by
Ahold) (the "Base Equity Value"), minus 100%. If the ICA Put Option is exercised on, or after, April 27, 2005,
and the parties cannot agree on the price of the Option Shares being sold, the valuation of the Option Shares will
be performed by three independent valuation experts based on the acquisition value of ICA, as well as an amount
reflecting the premium that would be expected to be paid in a transfer of the full control of ICA characteristic at the
time of valuation of such acquisitions internationally.
Under the Shareholders' Agreement, in October 2002 Ahold and the ICA Partners jointly appointed an
independent valuation expert (the "Shareholders Expert") to determine the Base Equity Value. The Shareholders
Expert calculated a range for the Base Equity Value and delivered its determination to the parties in October 2003.
Ahold and the ICA Partners previously had agreed to use the midpoint of the range calculated by the Shareholders
Expert for purposes of determining the Premium Rate.
On November 27, 2003, Canica initiated an arbitration proceeding with the Arbitration Institute of the
Stockholm Chamber of Commerce, challenging the valuation by the Shareholders Expert. Ahold is vigorously
objecting to Canica's challenge in this arbitration proceeding. A decision by the Arbitration Institute is not expected
before August 2004. No assurance can be given at this time as to the outcome of this arbitration proceeding,
including as to whether the valuation by the Shareholders Expert will be binding upon the parties. If it is determined
that such valuation is not binding, a new determination of the Base Equity Value will be required to be made which,
could be higher or lower than that determined originally by the Shareholders Expert.
Under Dutch GAAP no liability is recorded to reflect the amounts that would be payable if the ICA Put Option
were to be exercised, because purchasing the Option Shares, if they were put to Ahold, would not put Ahold
in an onerous situation. Under US GAAP the estimated fair market value of the ICA Put Option, but not the shares
themselves, is recorded as a liability as further discussed in Note 31.
Since it is uncertain whether or when the ICA Put Option will be exercised and since the value of ICA may
change and is subject to negotiations and/or litigation, Ahold currently cannot determine the actual price it would
have to pay for the Option Shares upon the exercise of the ICA Put Option. In order to be able to estimate as of
year-end 2003, the fair market value of the ICA Put Option for purposes of these financial statements, and given
(i) the uncertainty as to whether the Premium Rate calculated using the Shareholders Expert's valuation as
described above will be binding upon the parties and (ii) the absence of any fair market value determination by
the Shareholders Expert for ICA shares subsequent to the date of the initial Ahold acquisition, Ahold retained an
external valuation expert (the "Ahold Expert") to determine the estimated Revised Equity Value of the ICA shares
assuming the ICA Put Option were exercisable, and had been exercised in full, as of year-end 2003, as well as the
Base Equity Value and the Premium Rate, each in accordance with the requirements of the Shareholders'
Agreement. Based on the estimated Revised Equity Value of the ICA shares as of year-end 2003, the estimated
Base Equity Value and the Premium Rate, in each case as determined by the Ahold Expert, Ahold estimated that
it would have been required to pay approximately EUR 2,100 for all of the Option Shares held by the ICA Partners
if the ICA Put Option had been exercisable, and had been exercised in full, as of year-end 2003. The Base Equity
Value determined by the Ahold Expert was within the range as determined by the Shareholders Expert, but the
Ahold Expert calculation was lower than the midpoint of the range because of different assumptions used. Ahold
nevertheless believes that the approximately EUR 2,100 amount determined as set forth above is a fair and
reasonable estimate of the amount that would have been payable by Ahold for all of the Option Shares held by the
ICA partners as of year-end 2003.