Ahold announced back in October that it had agreed to sell its 600 Spanish stores to the Permira private equity firm, a move seen as the most likely to protect the jobs of its 14,000 Spanish workers and meet the requirements of Spain's competition regulators.
The European Commission cleared the deal earlier this week, allowing the sale to be completed over a year after the Dutch retailer announced that it was to quit the Spanish market.
But while Ahold will be glad to add the cash for its Spanish unit the balance sheet, it is likely to consider its entire Spanish campaign something of a failure.
"With this move, Ahold exits the Spanish market just six years after entering the country and having investing around €1.5 billion," commented Carlos Hernandez, Spanish retail analyst at M+M Planet Retail. "Out of this, the acquisition of Superdiplo from Vista Capital in 2000 for €1.2 billion constituted the main chunk of the investments. Back then, the price paid for Superdiplo was considered by the sector as high, although the move allowed Ahold to gain a firm foothold in the Spanish market.
"Thus, although the sale allows the Dutch giant to liberate cash badly needed to balance its accounts, it also means multimillion losses for a company that leaves Spain with just half of the money it invested during its time there."
The piecemeal nature of Ahold's business in Spain meant that a financial buyer was always more likely than a trade one, with none of the nationwide players (Carrefour, Alcampo) likely to be permitted to bid on competition grounds and the smaller, regional retail players such as Eroski or Caprabo interested only in part of the business. Ahold repeatedly said that it would not split up the supermarket assets in order to sell them.
Permira's victory in a race of more than 20 contenders was something of a surprise, Hernandez said. "The interest for the stores located in mainland Spain proved to be more limited than the relevance of the operations in the Canary Islands, where the retailer holds the leadership of the market with a 45 per cent market share. This, and the commitment of Ahold to sell the business without segregating it (the company reportedly rejected offers from El Corte Inglés and Eroski to sell its Canary Islands operations) made Permira's bid ultimately successful."
Permira also triumphed over fellow private equity groups Vista Capital, Apax and CVC Capital Partners.
Permira now controls the fourth supermarket operation in the country, after Mercadona, Eroski and Caprabo, Hernandez said. "It is also the second private equity group to take over a large Spanish retailer, following CVC Capital Partners' purchase of El Arbol in November 2002. But this is not the first incursion of the company in retailing, as Permira already acquired the DIY operator Homebase from Sainsbury in the UK in 2000 and the German clothing retailer Takko ModeMarkt."
Perhaps because of this previous retail experience, Permira is unlikely to simply buy the Spanish supermarkets with a view to selling them off piecemeal to the companies Ahold snubbed - at least not yet.
"It is taking the turnaround of the operation very seriously," said Hernandez. "The company managed to get a syndicated loan worth €600 million from the Bank of Scotland, Société Générale and Caja Madrid in order to finance the acquisition and revamp of the chain. Furthermore, in terms of management, the presence as chairman of Carlos Criado-Perez, former managing director of British retailer Safeway, shows that the company is keen to introduce changes to improve the positioning of the operation."
He added: "In any case, the current planning restrictions against open hypermarkets in Spain and the increasing popularity of the supermarket format make this operation desirable to virtually all the main grocery retailers, which would significantly boost their presence in the country. This interest is likely to hand Permira substantial profits if it sells it off in the future."
As for Ahold, the sale of the Spanish unit is just the latest step on its long road to recovery. Having already sold most of its retail units in Latin America and Asia, as well as some in central and eastern Europe, the company is currently finalising the sale of its Bruno's and BI-LO businesses in the US, where it could also decide to offload the US Foodservice unit which was largely responsible for the fraud.
The company's continuing exposure to the weak dollar continues to take a major toll on its results, and the new Ahold management under ex Ikea boss Anders Moberg may decide that the long-term gains from the foodservice unit - or indeed any of its US retail operations - are not worth the current drag on earnings caused by adverse exchange rates.
There has been no suggestion as yet that the US business will be next on the list for disposal (a move which would effectively leave Ahold with just its European operations) but it certainly weighed heavily on the group's latest set of results.
Net losses for the third quarter were €166 million, compared to €100 million a year earlier, with the weak dollar wiping out the impact of improved performances from the US retail and foodservice operations. However, charges relating to the Spanish sale and the enforced repurchase of a stake in Scandinavian chain ICA also impacted profitability.