Mumbai: British private equity firm CVC Capital Partners will acquire 73.2 per cent stake in Dutch food retailer and wholesaler Schuitema NV from Royal Ahold NV, in a deal estimated at €695.4 million ($1.1 billion).

CVC will pay Ahold €185 million in cash for the 73.2 per cent stake and hand back 58 of Amersfoort-based Schuitema's grocery stores that operate under the C-1000 brand, as well as real estate assets. Ahold will also gain a 20 per cent indirect holding in the new entity housing the Schuitema assets, but without any voting rights.

Amsterdam-based Ahold said the deal values the whole of Schuitema at €950 million. The 58 Schuitema stores that Ahold receives would further boost its dominance in the Dutch market, where its Albert Heijn chain already has a 30 per cent share. Ahold plans to convert these 58 stores to its Albert Heijn banner.

Schuitema said in a statement the deal was based on an enterprise value for the whole of Schuitema of €950 million ($1.51 billion).

It said it expected the deal to be completed in the second half of the year and the staggered transfer of stores to Ahold would then start and be completed before the end of the year. After the deal closes, Schuitema said it planned to give other shareholders the opportunity to sell their stakes and then end it's listing on the Amsterdam bourse. It has also said the stake sale should allow it to expand via mergers and acquisitions, with Super de Boer and unlisted chain Plus seen as possible candidates.

The announcement marks a departure from the restructuring plan Ahold initiated in 2006 to raise funds following a 2003 accounting scandal at its US Foodservice Inc unit that brought it to the brink of bankruptcy. The deal with CVC follows three months of talks.

Last year, Amsterdam-based Ahold sold US Foodservice to private equity firms Clayton, Dubilier & Rice Inc. and Kohlberg Kravis Roberts & Co. for $7.1 billion, and its US-based Tops Markets LLC to Morgan Stanley Private Equity for $310 million. Ahold executives recently said they hope to divest the group's 49 per cent holding in Portugal's Jeronimo Martins SGPS SA this year.

Although some analysts think that the cash amount to be paid by CVC was a little lower than expectation, the notional gap would be more than outweighed by the choice of C-1000 stores Ahold is getting.

A spokesman for CVC declined to comment on its plans for Schuitema. CVC's other European retail investments include the Debenhams Retail plc department store business in the U.K. and Dutch specialty retailer Retail Network Co. BV. Last year CVC was part of a consortium that tried and failed to acquire U.K. grocer J Sainsbury plc.

CVC Capital Partners is a leading global private equity firm with approximately $25 billion  (€21 billion) in funds focused on management buyouts. CVC was founded in 1981 and today has a network of 18 offices throughout Europe, Asia and the United States. Since 1981, CVC has completed over 250 investments across a wide range of industries and countries.

Royal Ahold NV is a major international supermarket operator based in Amsterdam in the Netherlands. Ahold is listed on Euronext Amsterdam, the New York Stock Exchange and the Frankfurt Stock Exchange. It had annual revenue of  €44.8 billion in 2006.