Royal Ahold to Buy Remaining Peapod Stock

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Dutch food conglomerate Royal Ahold announced plans yesterday to buy the remaining shares of online grocer Peapod Inc.

The approximately $35 million purchase will be followed by a merger of Peapod with an Ahold subsidiary such as its supermarket chains Giant Food and Stop & Shop. The company did not say whether the Peapod brand would remain intact.

Ahold bought a 58 percent share in Peapod in April 2000. Ahold closed the Internet retailer's large, expensive fulfillment centers and began picking and packing orders out of its Giant and Stop & Shop stores.

The announcement to buy the rest of Peapod comes one week after much-maligned Internet grocer Webvan Group said that it was closing.

It also comes three weeks after English online grocer Tesco PLC said it was entering the U.S. market in a deal with supermarket chain Safeway Inc. Together, the two firms plan to use a store-fulfillment model similar to the one being used by Peapod and the Ahold-owned stores.

Ahold/Peapod and Tesco/Safeway appear to be at the threshold of a one-on-one battle for the U.S. Internet grocery market.


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