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Ahold Agrees to $1.1 Billion Settlement with Shareholders



Ahold, which generates 70% of sales in the United States, said the settlement would avoid costly court cases and the company had "attempted to make fair restitution without endangering the continuity of the company or its business strategy for the coming years."

A statement by the retailer said the settlement represented the last "significant" civil case it faces in the scandal, in which Ahold overstated earnings by more than 1 billion euros between 1999 and 2002, mostly by inflating sales at its U.S. Foodservice distributing subsidiary.

Ahold executive board member Peter Wakkie said the deal treated both American and other investors fairly, as well as the company itself.

"We think this is a fair amount. It is a substantial compensation for shareholders of between $1 and $1.30 per share," Wakkie said. "This is not so high that it will bring Ahold into problems."

Ahold is expected to release third-quarter results tomorrow, and analysts anticipate net income to fall by 12% from the previous quarter, before news of the settlement charge, in the face of tough pricing from competitors and disappointing sales growth. Many experts have been quoted as saying they expect Ahold to abandon current margin targets.

Citing a poll of five analysts, Dow Jones said it expects Ahold's third quarter net profit to be 110 million euros ($129 million) versus a net loss of 166 million euros ($194.6 million) in the same period last year. Analysts are furthermore expecting to focus on operating margins at its U.S. retail units and the long-awaited strategy update from U.S. Foodservice, which accounts for a third of sales. Ahold should set medium targets for U.S. Foodservice.

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