9 October 2002
The Netherlands Shares in Dutch retailer Royal Ahold NV fell more than seven percent to a record low on Tuesday after the company said its joint venture partners in ICA in Scandinavia and a partner in Central America can under certain circumstances force Ahold to buy them out. Ahold, the world's third-biggest food retail and food service group in sales terms, earlier republished the terms of two existing joint ventures and said it wanted to clarify the terms to avoid market speculation about the future of the ventures.
The news knocked Ahold shares and traders said investors were worried that the retailer would have to pay out more money to cover its partnerships after spending $490 million in June on buying out its Argentine partner. Yesterday afternoon Ahold shares were 7.01 percent lower at 10.62 euros after earlier falling to 10.56 euros -- a multi-year low. The stock has lost more than 65 percent so far this year.
"At issue here is the fact that the company could be forced to spend money that it simply doesn't have right now," said Delta Lloyd trader Jan-Paul Raterink.
Ahold's announcement aimed to clarify terms of its agreements with ICA Forbundet and Cania in Scandinavia and CARHCO, in which the the Paiz family in Central America holds a 33 percent stake. In Scandinavia, Ahold is obliged to buy out its partners should either of them wish to sell out but fail to reach an agreement with each other.
