Ahold Places Order for Rest of Peapod

Baldwin Louie — Mon, 16 Jul 2001 18:00:00 -0400

Ahold, the $24 billion Dutch food retailer, announced Monday morning that it plans to acquire the remaining 42 percent of original e-grocer Peapod that it does not yet own. Ahold offered $2.15 per share for all outstanding shares of Peapod. The deal is worth about $35 million.

Peapod's stock was up 86 cents, or 68.8 percent, to $2.11. Peapod's board has already approved the offer, which came about on the advice of a special committee that was formed to consider financing alternatives for the net grocer.

Ahold's complete acquisition of Peapod comes at the end of a busy few weeks for the online grocery market. A the end of June, Safeway announced that its online grocery channel, GroceryWorks.com, received a new round of financing. Tesco acquired a 35 percent stake in GroceryWorks for $22 million, and Safeway owns 50 percent. Safeway hopes that Tesco can bring the success of Tesco.com to the U.S. market.

Just two weeks later, overly financed and overly ambitious online grocer Webvan called it quits, after raising more than $1.2 billion in funding. Finally, last Thursday, HomeRuns.com, which served Boston and Washington, D.C., threw in the towel.

Ahold rescued Peapod from the brink of bankruptcy in April 2000 when it invested $73 million for a 51 percent stake. Since then, Ahold has slowly rebuilt the online grocer to serve customers at grocery chains it owns in the U.S., including Stop & Shop and Giant in the East Coast. It looks like
it's working: Peapod, which has struggled for 10 unprofitable years, announced recently that it turned an operating profit in the Chicago area, and the company expects to turn a profit at other locations before the end of the year.

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Ahold Places Order for Rest of Peapod