Brokers at ING call on Tesco to snap up Ahold
MARKET talk that Tesco should snap up Dutch rival Royal Ahold resurfaced yesterday, after analysts said that such a deal would boost the retail giant’s US presence.
Broker ING yesterday issued a note entitled “Buying Ahold would actually make sense for Tesco”.
ING said that a potential £13.5bn bid would be easily financed by Tesco’s balance sheet and would push its 2011 pre-tax profits up by 31 per cent.
Peter Brockwell and John David Roeg at ING said: “The US market is too big for Tesco to ignore, yet any attempt to increase the scale of Fresh & Easy could prove very risky.
“Ahold should be viewed as a one-off opportunity to acquire an undervalued asset at a low point in the US consumer cycle.”
Buying Ahold would add around 700 US grocery stores the 115 Fresh & Easy stores that Tesco has opened since 2007.
A Tesco spokesman declined to comment. But Ahold’s shares climbed 1.34 per cent yesterday to €8.69 (£7.82) on the back of market talk.
Ahold’s share price was decimated in 2003 after it admitted $500m (£304.6m) worth of accounting irregularities. Back then Tesco was believed to be mulling a bid for the group to aid its international expansion.