Ahold Will Buy Rest of Peapod For $2.15 Per Share, or $35 Million
Dutch supermarket group Ahold NV said it would acquire the remaining shares of Chicago-based online grocer Peapod Inc. that it doesn't already own for about $35 million.</br></br>The deal comes on the heels of a string of closures from other online grocers, including the high-profile Webvan Group Inc., which shut down its operations earlier this month. But analysts drew a distinction between the likes of Webvan, which wasn't affiliated with an existing, traditional supermarket, and Peapod, which works with Ahold's supermarket chains in the U.S., including Stop & Shop and Giant Food Inc.</br></br>Ahold, which already owns 58% of Peapod, said it had agreed to buy the company's remaining 17.9 million shares outstanding for $2.15 a share, a 72% premium over Peapod's 4 p.m. Friday price of $1.25. At 4 p.m. yesterday on the Nasdaq Stock Market, Peapod was up 69%, or 86 cents, to $2.11. Peapod will be delisted from Nasdaq upon completion of the deal, which is expected to happen in the third quarter of this year.</br></br>Another European retailer to take a stake in the U.S. online grocery market is British supermarket retailer Tesco PLC, which in June bought a 35% stake in GroceryWorks.com, an online grocer established by Safeway Inc. in Pleasanton, Calif.</br></br>Once a competitive sector, the U.S. online grocery business has thinned out, with Peapod one of the only players left. Closely held HomeRuns.com also closed last week. Without competition in its local markets, Peapod will be relatively free to pursue its own advertising and promotional plans, without concerns that its prices could be undercut, analysts said.