Dutch Firm Comes to Peapod’s Rescue

Dutch supermarket group Royal Ahold said it agreed to buy 51% of Peapod Inc. for $73 million, bailing the struggling Internet grocer out of financial straits. Peapod said Ahold will invest about $73 million in a newly issued series of Peapod stock at $3.75 a share. Ahold would also get warrants for more shares that would increase its Peapod voting stock to 75%. The news sent Peapod’s shares up 69 cents to close at $3.19 on Nasdaq. Peapod, which has run up big operating losses since its initial public offering, had said last month that it might have to put itself up for sale after four firms canceled a $120-million investment after the resignation of then-Chief Executive Bill Malloy. Since then, the Skokie, Ill.-based company’s stock has fallen from a 52-week high of $16.36 to a low of $2.50. Ahold’s U.S. division owns five supermarket companies, operating 1,063 stores with 1999 sales of $20.3 billion. Under the proposed deal, Ahold will supply Peapod with goods, services and fulfillment centers, and Peapod will continue as a stand-alone firm.