ID NEWS: Analysts ruminate about USF prospects; Ahold to complete audits

Royal Ahold, Zaandam, The Netherlands, says its probe into bookkeeping errors at several subsidiary companies, including U.S. Foodservice (USF), Columbia, MD, will be completed within days, according to a Reuters report.

At the same time, Ahold has fulfilled a key condition for a standby credit facility, with the completion of its 2002 audit of Stop & Shop. The banking syndicate had given Ahold a June 30 deadline on this U.S. supermarket chain audit.

Meanwhile, the Baltimore Business Journal has reported that analysts feel USF may be seeking a buyer but that potential acquirers may be "steering clear."

"It's a troubled asset and I don't think a strategic player would want to get into that situation," said Andrew Wolf, an analyst with BB&T Capital Markets, Richmond, VA. "A financial player at the right price might take it to turn it around."

The Baltimore publication says analysts opine there is "no doubt" that, if Ahold sells USF, it will not get nearly the $3.6 billion that the international company paid for it in April 2000. This is especially so, if the business "cannot seem to recover from the bad publicity" resulting from an overstatement of $880 million in earnings.

However, analysts such as Wolf say it is in the best interests of Ahold to sell USF. "They have liquidity issues, so they have to raise some money," Wolf told the Baltimore paper. "Well before this issue came to light, things weren't going well at U.S. Foodservice."

It is also thought that new Ahold CEO Anders Moberg will want to sell USF, because he has no foodservice experience. "Moberg worked at Ikea and Home Depot, so he's got some good retailing background," said Gus Valen, ceo of the Valen Group, a Cincinnati-based strategic consulting firm, also quoted in the article. Valen also commented that Moberg has indicated he will not make a decision about USF until the fall.

However, USF, the nation's second largest broadliner at $17.5 billion in sales last year, is still a major presence and is unlikely to "just disappear," analysts also said.


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