April 5, 2018 / 1:21 PM / 18 days ago

Ahold Delhaize urged to put poison pill decision to vote

AMSTERDAM (Reuters) - Dutch-Belgian supermarket operator Ahold Delhaize should put any decision about renewing its poison pill structure to a vote by shareholders, the association for Dutch retail investors (VEB) said on Thursday.

The VEB joins activist investor CIAM in wanting a vote on the matter, after CIAM wrote in a letter to management made public last week that the poison pill structure depresses shareholder value in Ahold.

“Shareholders are consulted when they need capital, but when a decision needs to be taken about the future of the company we are told to keep our mouths shut” VEB director Paul Koster said in a statement.

Like most Dutch blue chip companies, Ahold has a governance structure that enables management to fend off potential hostile suitors. Ahold’s agreement runs out at the end of the year and the company has said management will decide about its possible renewal without seeking shareholder approval.

However, the issue will be on the agenda at Ahold’s April 11 annual shareholders meeting.

BERNSTEIN BACKS CIAM, VEB

“We think those types of option agreements are bad corporate governance,” Bernstein Research, which holds an “Outperform” rating on the stock, wrote in a note to investors on Thursday. Bernstein does not hold a stake in Ahold while its parent firm holds a stake of about 0.08 percent.

It said it understands why Ahold’s management would want protection when facing a hostile move, but called the option “a disproportionally big power”.

It “takes away control from shareholders at moments in time when their views are most relevant and when shareholders are most likely to want to express their views”, Bernstein analysts wrote.

CIAM, the VEB and Bernstein have asked Ahold to put the poison pill structure renewal up for a shareholder vote.

The issue is especially topical as consolidation in the U.S. food retail market, where Ahold does two-thirds of its business, is heating up.

Competition from Amazon, which acquired Whole Foods supermarkets last year, has sparked market speculation of further consolidation, with suggestions that Ahold could team up with another U.S. player such as Kroger.

Ahold on Thursday named Frans Muller, who oversaw the integration of Ahold and Delhaize’s U.S. businesses when they merged in 2015, as chief executive when current CEO Dick Boer retires on July 1.

Muller was CEO of Belgium’s Delhaize until Ahold acquired it in 2015 for 9.3 billion euros ($11.4 billion).

Reporting by Anthony Deutsch; editing by Jason Neely

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