European owner of Stop & Shop settles for $1.1 billion

Bloomberg.com is reporting that Ahold will pay $1.1 billion as part of a settlement:

Royal Ahold NV, the Dutch owner of the Giant and Stop & Shop supermarket chains, agreed to pay $1.1 billion to settle a U.S. class-action lawsuit over the company’s false earnings statements.

The accord will result in a third-quarter cost of 585 million euros after taxes, Peter Wakkie, the executive board member responsible for Amsterdam-based Ahold’s corporate governance, said today on a call. It’s the biggest securities class-action settlement by a European company in the U.S. Ahold gets about two-thirds of its revenue from the U.S.

“This draws a line under the whole affair and allows Ahold to move forward and begin delivering,” said Andrew Bell, a European equity strategist at Carr Sheppards Crosthwaite in London, which oversees the equivalent of $11.9 billion. “I want to see margins grow and the company get its investment-grade credit rating back.”

The agreement ends all civil litigation against Ahold in connection with its $1.14 billion profit overstatement. The accounting scandal triggered a 63 percent drop in the company’s share price in one day and the resignation of Chief Executive Cees van der Hoeven. Anders Moberg, brought in to restore confidence, has revived the stock by selling assets to cut debt and improve profitability.

Ahold’s shares rose 3 cents, or 0.5 percent, to 6.03 euros in Amsterdam. The stock has more than doubled since Dutch equity trading ended on Feb. 24, 2003, when the overstatement was first announced. The company has a market value of 9.41 billion euros.

According to the Stanford Law School Securities Class Action Clearinghouse, the Ahold settlement is “the largest securities-fraud class-action settlement against a European company in the U.S.”