Activist investor Elliott puts pressure on Ahold Delhaize's plans for IPO Bol.com

Activist investor Elliott puts pressure on Ahold Delhaize's plans for IPO Bol.com

01 December 2021Reading time: 3 minutes

During the recent investor day, Ahold Delhaize announced its plans to list its online store Bol.com next year. With this, Ahold Delhaize seems to be finally listening to the long-cherished wish of investors for more transparency in the results of Bol.com.

Although it is no secret that the European webshop has been achieving new sales records for years and is growing at a rapid pace, it remains unclear how this relates to the total valuation of the Dutch company. Bol.com achieved a EUR 4.3 billion revenue in 2020 and a revenue of EUR 5.5 billion is assumed for this year.

IPO Bol.com may not be Elliott Management's only wish

The decision for the IPO does not appear to have come entirely of Ahold Delhaize’s own accord. A few days after the announcement, news came out that hedge fund Elliott Management has taken a 3 percent stake in the supermarket concern. This investment would involves an amount of approximately EUR 900 million. With the saying 'who pays, who decides', Elliott wants to end the ambiguity surrounding the results of Bol.com. The activist investor seeks for a return on this investment and expects the IPO of Bol.com to have a positive effect on the share price of Ahold Delhaize.

For now it remains to be seen whether the IPO of Bol.com will actually lead to the intended stock price increase. If it turns out to be disappointing, Elliott may pull out another scenario from the fridge. This could result in the separation of Ahold Delhaize's US and European operations.

Now that the supermarket group is large enough in terms of revenue to stand on its own two feet after the acquisition of the Belgian Delhaize in 2016, this is not a unlikely scenario. For the whole of 2020, the European activities accounted for a total revenue of EUR 29.3 billion and the American activities for EUR 45.5 billion. Ahold Delhaize also wants to expand its online activities in Eastern Europe, where it is currently already present with its own supermarkets.

However, it is questionable whether a separation can actually provide the desired added value for both investors and the supermarket group. In particular, the valuation of the Eastern European activities is still quite low. Moreover, it remains to be seen, to what extent hedge fund Elliott Management will further interfere with Ahold Delhaize.

Stock price development

Since June this year, the share price of Ahold Delhaize has risen sharply and investors reacted positively to the news about the IPO of Bol.com. On the day of the announcement on November 15, the stock price rose with 2 percent. The share price is now (22.11.2021) at Eur 30,79.

The future price of the stock is subject to several political, industrial and sector specific as well as economic factors. Investors should consider these risks when making their investment decisions. Developments can be different at any time than investors anticipated on, which could result in capital losses.

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18/01/2022 17:59:15