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Bloomberg: Harris Teeter draws interest from Dutch grocer

By David Welch
Bloomberg News

Harris Teeter Supermarkets Inc., the Matthews-based grocery chain exploring a sale, has attracted interest from Royal Ahold NV, the Dutch owner of Stop & Shop stores, said people with knowledge of the matter.

Ahold has contacted JPMorgan Chase & Co., retained by Harris Teeter to evaluate options, and is seeking more information on the sale process, said one of the people, who asked not to be named because the negotiations are private. Ahold hasn’t made a formal bid, according to that person.

Harris Teeter’s market value tops $2 billion. Buying the chain would help Ahold expand further in the southern U.S. and Washington, D.C., and its acquisition history and previous expansions position the Dutch chain as a likely bidder, said BMO Capital Markets analyst Karen Short.

Ahold “appears to have more than adequate capacity on its balance sheet to complete a transaction,” she said in a Feb. 20 research note. She also listed Lakeland, Florida-based Publix Super Markets Inc. and Cincinnati’s Kroger Co. as possible suitors.

Harris Teeter shares climbed as much as 2.8 percent after Bloomberg’s report. They advanced 1.5 percent to $42.12 as of 4:04 p.m. in New York.

Harris Teeter disclosed this month that it hired JPMorgan after receiving advances from two private-equity firms, which the company didn’t name. Representatives at Ahold, Harris Teeter, JPMorgan and Publix declined to comment. An official at Kroger didn’t immediately return a call seeking comment.

Harris Teeter has more than 200 stores in North Carolina, South Carolina, Virginia, Georgia, Tennessee, Maryland, Delaware, Florida and Washington, D.C. The company reported $4.54 billion in revenue for the year ended Oct. 2, 2012.

Earnings before interest, taxes, depreciation and amortization over the same period amounted to $306.5 million, according to data compiled by Bloomberg. Grocery companies typically sell at 7 to 10 times Ebitda, said one of the people familiar with the situation, indicating Harris Teeter’s sale value could be as much as $3.1 billion.

About 60 percent of Ahold’s sales come from the U.S., according to data compiled by Bloomberg. This month the Amsterdam-based company said it agreed to sell its 60 percent stake in Swedish grocery chain ICA for more than $3 billion.


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