Troubled Dutch retailer Royal Ahold has announced that it has reached an agreement for the sale of its Indonesian operation to food retailer PT Hero Supermarket for approximately €12m (US$13.2m), excluding proceeds from the sale of store inventory.

The company said the asset purchase agreement is subject to the approval of Hero's shareholders and is expected to be finalised in the third quarter of 2003. Hero is a prominent food retail group listed on the Jakarta stock exchange with 200 outlets throughout Indonesia.
 
The transaction involves 22 stores plus one under construction, and two distribution centres. Ahold said the actual transfer of the stores and both distribution centres will take place following the approval of Hero shareholders. Staff at Ahold's Indonesian headquarters and operations staff of the stores to be closed are not included in the transaction, although Ahold said it is committed to meeting its obligations to these associates.
 
The company said the divestment of Ahold's activities in Indonesia is part of its strategic plan to restructure its portfolio to focus on high-performing businesses and to concentrate on its mature and most stable markets.
 
Ahold first entered the Indonesian market through a technical service agreement with the PSP group in 1996. That agreement ended in 2002 and Ahold Tops Indonesia became a wholly-owned subsidiary. Unaudited net sales in 2002 amounted to approximately €37m. Ahold employs approximately 1,600 people in Indonesia.

Ahold has been forced to divest some of its worst-performing businesses in order to cut its debt pile. The retailer is at the centre of an accounting scandal after it revealed in February that it had overstated earnings at its US Foodservice unit by more than $500m. The revelations led to the resignation of both the CEO and CFO of Ahold.