Ahold was playing hard to get

The sting was in the tail during today’s press conference in Brussels, where the two love birds Ahold and Delhaize announced their engagement.

The final question by a female journalist was essentially feminine. “Who took the initiative to start the talks?”, she asked politely, unaware of the agitation her question sparked in Mats Jansson. The Swedish Chairman of Delhaize responded not amused. “What is this with you journalists that you always want to know such detail?”, he venomously responded to this question with a question. “No, I am not going to comment on this.”

Maybe it’s because the Swedes are not known for being overly passionate, but – Mr. Jansson – let me tell you that when two parties express their warm feelings and intentions to clinch a long lasting marriage, everyone is keen to know who took the initiative. Not only women, no everyone wants to know who is the initial kisser and who the kissed.

Especially in this specific business case, as an answer to this relevant question sheds a light on the starting position at the negotiations which did lead to the so called ‘merger of equals’. In this negotiations game, playing hard to get does pay a strong dividend. And looking at what’s been disclosed now, it is clear to say that it was indeed Delhaize who courted Ahold in the first place. The agitation of the Delhaize chairman clearly underlines this.

It put the Belgians in the underdog position right from the start. And the dividend payed to Delhaize shareholders isn’t as strong as that of their Ahold peers who can claim the majority of the stake in the new partnership. Emotion is a key element of what has been discussed between the representatives of Delhaize and Ahold. Both Dick Boer (CEO Ahold) and Frans Muller (CEO Delhaize) stressed in their comments the equality of both partners.

No one wants to lose face and the intended merger had to be swallowed by critical stakeholders on both sides. Therefore the strong focus on this being a merger of equals. Because of this, the whole governance structure of the new company is a delicately constructed flow chart balancing all big names in the current leadership and supervisory boards of both retailers. Everybody equally important and everybody happy.

Even the name of the new entity is balanced: Ahold Delhaize. In that sequence, not the other way round. Also the choice of headquarters is the result of boardroom table diplomacy: the Delhaize office in Brussels will become the European office. And Ahold will leave its historic location of Zaandam – that’s really an emotional sacrifice – to set up office somewhere else. Half way Zaandam and Brussels, but on Dutch soil.

In practical terms there will be both a European and a global headquarters of Ahold Delhaize and both are located within an hour’s travel by car (leaving the notorious Brussels traffic jams out of this calculation). So Albert Heijn now reports to the office in Brussels, but when group results are being presented all eyes are set on the global office somewhere in the Dutch province of Noord-Brabant.

For decades members of the European Parliament regularly travel between Brussels and Strassbourg to have their meetings. This is also an outcome of a delicate negotiations game intended to keep both French and German emotions and ego’s in the Union. Ahold Delhaize however is a business geared at increasing profits to please shareholders and shoppers (or shoppers and shareholders, as the retailers put it).

Simplicity is one of the pillars under the ‘Reshaping Retail @ Ahold’ strategy, designed by Dick Boer. It refers to a structural zeal to simplify processes, speed up operations and cut red tape in order to cut cost and improve the bottom line. If the marriage between Ahold and Delhaize is finally concluded by mid 2016, the clock will start ticking before emotions have cooled down and the sound decision is taken to close one of the two offices.

Because that’s what retail is all about. Even in a merger of equals, simplicity pays dividends.