UPDATE 4-Ahold Delhaize doubles down on Romania with $1.4 bln Profi deal

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Profi has third-biggest market share after Lidl and Carrefour

Acquisition extends Ahold's reach into rural Romania

Ahold operates 969 Mega Image stores in Romania

Adds biggest retailer by number of stores in paragraph 2, quote from MidEuropa in paragraphs 5 and 6, original purchase price and market share in paragraph 7

- Ahold Delhaize AD.AS has agreed to buy Romanian grocery retailer Profi from private equity firm MidEuropa for 1.3 billion euros ($1.37 billion) in a deal that will more than double the company's operations in Romania.

The acquisition of Romania's biggest food retailer by number of stores will broaden Ahold's reach to more rural parts of the eastern European country, as its existing 969-store Mega Image supermarket chain is mainly present in urban areas.

Expected to close in 2024, the fully debt-funded acquisition will help increase sales growth and operating margin for Ahold Delhaize Europe, the company said.

"This step forward fortifies our position in Central and Southern Europe, it also underscores our trust in the potential of the region," Wouter Kolk, CEO of Ahold Delhaize Europe and Indonesia, said in a statement.

Robert Knorr, managing partner at MidEuropa, said Romania is an attractive market as it still has space for new supermarkets to open and shoppers' tastes are evolving to demand a broader range of fresh produce and global cuisines.

"The middle classes are getting wealthier and people have higher spending power," he said in an interview.

Profi, which MidEuropa bought for 533 million euros in 2017, operates 1,654 stores in Romania and generated 2.5 billion euros in sales in the 12 months to June this year. By market share, Profi is the third-biggest grocery retailer in Romania after Lidl and Carrefour.

"Profi is a small-format, convenience store that will complement Ahold's Bucharest footprint with a mix of urban and rural stores," Bernstein analysts said in a note.

As inflation squeezes household budgets across Europe and people seek to curb their spending on essentials, Ahold Delhaize said synergies from the deal "will directly benefit the Romanian customers."

($1 = 0.9472 euros)

(Reporting by Olivier Sorgho and Helen Reid; Editing by Louise Heavens, Kirsten Donovan and Mark Porter)


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