Selling off U.S. Foodservice (USF), Columbia, MD, Ahold's American broadliner subsidiary, would "create a massive destruction of shareholder value," Anders Moberg, ceo of Royal Ahold, Zaandam, the Netherlands, told shareholders today. Therefore, Ahold's strategic priorities, at least for the next two years, call for rebuilding USF, America's second largest broadliner.
The American distributor is in a "sub-optimal" state right now, Moberg added. However, "I genuinely believe that we can build upon, what is today, a collection of leading regional assets," he said.
The American foodservice market is huge-worth $160-billion-plus-Moberg further noted. Sysco Corp., Houston, has a 15% market share and USF, with more than $18 billion in sales, has an 11% share. "So there is lots of room for growth."
Ahold's plan to integrate USF business, after a series of acquisitions, was "badly derailed by the fraud discovered in 2003," Moberg further explained. Therefore, at this stage, Ahold does not know the "true underlying strategic value" of this asset which is nevertheless a "major player in what still amounts to a highly fragmented but still very important growth industry."
Plans are to actively manage this "critical asset" to get it on track. Moberg said he expected to take 18 to 24 months to rebuild USF and restore value. "Only when we have a clear picture of the value of this business can we decide the role of U.S. Foodservice within the future strategy of Ahold."
The game plan is to manage USF as a single business operating separately from retail. It will receive the "full attention" of Ahold's Executive Board, and an Advisory Board will be established as well, which will include some "external" members. "We are in the process of installing a new management team whose assignment is to get the company on track."
In addition, "necessary disciplines and strict internal controls" will be applied to "establish good governance and restore the business to health."
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