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Ahold settles lawsuit for $1.1bn
YOUR E-MAIL ALERTSAMSTERDAM, The Netherlands (Reuters) -- Dutch retailer Ahold NV has settled a class-action suit in the United States linked to a 1 billion euro ($1.18 billion) profit overstatement scandal in 2003, the company said on Monday. Ahold the world's fourth-biggest food retail and foodservice group in sales terms, said that it would pay $1.1 billion to shareholders who purchased stock between July 30, 1999 and Feb. 23, 2003. "We think this is a fair amount. It is a substantial compensation for shareholders of between $1 and $1.30 per share," said Peter Wakkie, a member of the Ahold executive board. He said the deal treated both American and foreign investors fairly, as well as Ahold itself. "This (amount) is not so high that it will bring Ahold into problems." The company said it will take a provision of 896 million euros in the third quarter, resulting in a charge of 585 million euros after tax, as a result of the settlement. Ahold would receive 100 million euros from insurance. Looking at compensation faced by other firms blighted by accounting scandals such as Worldcom and Enron, Wakkie noted: "Although we have paid a sizeable amount we are glad we have stayed south of those amounts." Ahold said, assuming there were no delays, the money would be distributed by a claims administrator in 2007. "From the moment this came out in February 2003 this has been a dark cloud hanging over Ahold," said Peter Paul de Vries of the VEB shareholders lobby organisation which helped broker the deal and also receive 2.5 million euros from Ahold. Expectations for an Ahold compensation settlement had been higher at 1 billion to 1.5 billion euros, he added. The retailer is expected to report a lower third-quarter profit on Tuesday but investors are likely to focus on the unveiling of a new strategy for its U.S. Foodservice business (USFS). Several analysts said Ahold may abandon its retail targets for 2006, which the company reiterated earlier this month. 
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