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Peapod Finds Shelter From the Storm

Shares in Chicago-based Internet grocer Peapod Inc., based in Chicago, were soaring today after Dutch supermarket company Koninklijke Ahold NV, which has a 58 percent stake, said it will acquire the remaining 42 percent of the company's shares for $35 million.

Peapod was up 86 cents or almost 69 percent in midday trading to $2.11.

Ahold offered $2.15 a share for the stock, which opened today at $1.70 after closing Friday at $1.25. The offer was a 72 percent premium over Friday's close.

Peapod will be delisted from NASDAQ when the deal is completed.

Like many companies in the Internet grocery space, Peapod had been struggling. Webvan packed it in last week, filing for bankruptcy. Peapod most recently reported a first quarter net loss of $15.5 million or 86 cents per share, compared to a net loss of $12.7 million or 70 cents per share for the year-ago quarter.

Ahold, which operates the Stop & Shop chain in the United States, said the offer was made in response to a request from a special committee of independent directors designated by Peapod's board that had been established to consider various financing alternatives.

In connection with its earlier acquisition of Peapod convertible preferred stock, Ahold received antitrust clearance and the company said no further clearance is necessary. The companies expect the closing to occur in the third quarter. Ahold bought a 51 percent stake in Peapod in April 2000, and an additional 7 percent stake in October.

"Throughout our extensive retail operations in the U.S., we see a growing and strong demand for home delivery," said Michiel Meurs, Ahold's CFO and the man responsible for the company's e-commerce efforts. "By bringing Peapod fully into the Ahold family, we are best positioned to further grow the company successfully and meet increasing customer requirements. Strategically, we are convinced that the Web-based grocery business combined with our store network under strong local brands will prove to be a powerful concept to attract and retain loyal customers."

Founded in Chicago in 1989, Peapod currently serves 120,000 customers in five markets: Chicago, Boston, southern Connecticut, Washington, D.C. and Long Island, N.Y. Ahold operates approximately 8,500 supermarkets and other store formats in the United States, Europe, Latin America and Asia.