Dell, Virgin Media, maybe American Airlines. So far, 2013 has been all about deals. So how about this for some fantasy M&A: take a cash-rich European grocer that is expanding in the US, and get it talking to a rival that wants to pull out of the market.

Asking Ahold (the former) to buy Tesco (the latter) out of its Fresh & Easy business is probably a step too far, even for the most talented dealmaker. But Ahold has money to spend and will have to explain what it intends to do with it. The sale of its 60 per cent stake in Scandinavian retailer ICA, announced yesterday, will bring in €2.5bn. ICA has hardly been a stellar investment. It was bought in two stages for €2.3bn, and Ahold has taken €1bn in dividends. So there is a profit, albeit one that works out at 4 per cent per year, but ICA has also given Ahold plenty of problems. Still, at 15 times earnings, the sale price looks good.

So what to do with the €2.5bn? In the first nine months of 2012, Ahold spent €500m on cutting debt, €700m on shareholder returns and €700m on acquisitions. Net debt is now a comfortable 1.5 times earnings before interest, tax, depreciation and amortisation, so there is no urgent need to cut further.

That leaves management to decide the split between shareholder returns and investment. The former would go down well with some investors. But Ahold also needs to think about its rating which, at 11 times forecast earnings, is at the lower end of the European grocery sector. It does not have the recovery potential of, say, Carrefour, nor the growth prospects of Jerónimo Martins. Same-store sales growth in the Netherlands and the US, its two largest businesses, is running at just 1 per cent. Like its rivals, Ahold will have to invest if it wants to grow in such stagnant markets, and the ICA cash gives it a chance to do that. It should think hard before handing that competitive advantage back to shareholders.

Email the Lex team in confidence at lex@ft.com

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