Dutch Firm to Purchase East Coast Market Chain

Royal Ahold expanded its U.S. supermarket presence Thursday in a surprising $2.9-billion deal to buy its sixth chain--Stop & Shop, the biggest grocery retailer in New England.

The proposed merger, which requires regulatory approval, would make Amsterdam-based Royal Ahold one of the top five supermarket operators in the United States. The company already owns Tops, Finast, Edwards, Giant Food Stores and Bi-Lo.

If Stop & Shop’s 176 supermarkets and 64 convenience stores are added to the Royal Ahold’s books, U.S. sales would account for more than half of Ahold’s total worldwide sales.

“This certainly makes them one of the most dominant players,” said analyst Bonni E. Zwickel of CS First Boston in New York.

Buyout firm Kohlberg Kravis Roberts & Co. has agreed to sell its 62% stake and the chain’s board has approved the sale. But the deal goes to the Federal Trade Commission for approval and faces reviews by attorneys general in at least two states--Connecticut and Massachusetts.

Ahold’s 650 stores already span much of the East, with supermarkets in Connecticut, Rhode Island, New York, New Jersey, Pennsylvania, Maryland, Virginia, West Virginia, North and South Carolina, Georgia, Tennessee and Ohio.

Strategically, the Quincy, Mass.-based Stop & Shop chain would form the northernmost link in the Ahold empire of sometimes overlapping service areas.

Under the agreement, Royal Ahold will pay $33.50 a share in cash for Stop & Shop stock. Royal Ahold also agreed to assume $1.1 billion of Stop & Shop’s debt.

Stop & Shop shares soared $6.375 to $33.125 Thursday on the New York Stock Exchange, nearly matching the per-share cash offer from Ahold.

Ahold’s U.S.-traded shares, Konink Ahold, lost 25 cents to $46.25 in trading on the NYSE.