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.

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