Capital Markets

Ending Food Fight, Ahold to Delist

The Dutch conglomerate is set to end its stormy relationship with U.S. investors.
Stephen TaubAugust 30, 2007

Ahold, the Dutch food conglomerate that was embroiled in a major accounting scandal at its US Foodservice subsidiary a few years ago, is planning to part ways with the New York Stock Exchange.

The company reported on Thursday that it would delist its American Depositary Receipts from the NYSE, deregister from the exchange, and terminate its reporting obligations to it. The company’s ADRs will continue to be traded on the over-the-counter market in the United States.

Ahold said it made the decision to cut costs. “The benefits of maintaining a U.S. registration and a NYSE listing have declined over time,” it stated in a press release.

Most Ahold shares held by U.S.- domiciled investors are acquired through Euronext Amsterdam, according to the company. The company’s average daily trading volume in the United States over the last 12 months was reportedly been less than 5 percent of the total worldwide volume.

Ahold said it intends to file the necessary regulatory forms for the delisting around September 10. The delisting would then be effective 10 days after the filing.

Ahold was accused of overstating net sales by about $30 billion for the fiscal years 2000 through 2002 as a result of the fraudulent inflation of promotional allowances at U.S. Foodservice. The allowances were allegedly inflated through the improper consolidation of joint ventures via fraudulent side letters. Accounting errors and irregularities were also said to have occurred.

For the fiscal years 2000 and 2001 and the first three quarters of 2002, Ahold overstated operating income by about $3.3 billion and net income by roughly $829 million, according to regulators.

Ahold and three former executives agreed to settle civil charges filed by the SEC without admitting or denying the allegations. The commission didn’t seek a penalty from the conglomerate in part because of what the SEC saw as the company’s extensive cooperation with the probe.

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