Delhaize CEO optimistic for growth in southeastern Europe

Delhaize CEO optimistic for growth in southeastern Europe

Belgian supermarket group Delhaize has struck a deal to buy Serbian retailer Delta Maxi Group for EUR932.5m (US$1.3bn).

The acquisition will see Delhaize take control of approximately 450 stores in Serbia, Bulgaria, Bosnia and Herzegovina, Montenegro and Albania. The company said that the deal would boost its profit for fiscal 2011 and reduce its dependence on the US market, which currently accounts for around 70% of sales.

"This transaction is an important step in rebalancing our geographic portfolio between our US, European and Asian operations," president and CEO Pierre-Olivier Beckers said.

Beckers added that Delhaize expects to generate "significant" revenue growth and synergies potential from integrating the business with its existing European operations.

The deal results in an acquisition multiple, excluding the positive effect of planned synergies, of 0.67x to 0.69x 2011 expected revenues and of 10.4x to 11.0x 2011 expected EBITDA.

As from the end of 2013, Delhaize plans to realise more than EUR16m annual synergies, particularly from improved procurement, better inventory management and optimized IT and supply chain systems and processes.

With a network of more than 800 stores in the region, Delhaize said that its operations in south-eastern Europe are expected to generate revenues totalling approximately EUR3.4bn in 2011.