The parent companies of regional grocery giants Stop & Shop and Hannaford have been looking into combining their operations under one umbrella for quite some time, but they may have a small roadblock in that plan – the Commonwealth of Massachusetts.
The shareholders of Royal Ahold and the Delhaize Group were quite enthusiastic about news of a possible merger, demonstrating their assent by way of a significant rise in both stock prices. However, some officials here in Massachusetts think antitrust issues may bring the entire affair to a screeching halt.
Hannaford has 25 stores in Massachusetts and another 131 fly the Stop & Shop banner. Like many brick-and-mortar competitors in other industries, they are often set up in close proximity to each other and officials fear this will lead to problems with fair competition following the proposed merger.
Both companies do more than 60% of their commerce in the US. While Ahold, parent company of Stop & Shop, has properties mostly clustered in the Northeast, Delhaize does most of its business in the U.S. as Food Lion, a Southeastern regional powerhouse. Analysts say that a merger would realize somewhere in the neighborhood of $670 million per year in reduced costs.
Massachusetts officials are far more concerned with the issues of competition. Economists who favor the position of the state are saying that the merger could go off without a hitch if some of the stores were sold. Everything is speculative at the moment, however, with both sides looking for a way to compromise.
It is unclear whether the merger of the two companies would result in a name change. Both brands are valued in the state, and part of the issue rests in trying to determine what will happen with the customer-facing side of the brand.
Keep your eyes on this space for updates.
