Ahold, Delhaize in talks to create top 20 global retailer

* Nearly two-thirds of sales in the United States

* Companies also held merger talks in 2006-2007

* Shares (Frankfurt: DI6.F - news) rise for second day in a row (Adds details, background)

By Robert-Jan Bartunek and Anthony Deutsch

BRUSSELS/AMSTERDAM, May 12 (Reuters) - Supermarket groups Ahold and Delhaize are in talks to create a top 20 global retailer with a major presence in the United (Shenzhen: 000925.SZ - news) States, a move that would help them fight booming discounters by increasing their buying power.

A deal would see Netherlands-based Ahold, which operates Stop&Shop and Giant in the United States, and Belgium-based, Delhaize, the owner of the Food Lion chain, combine to create a retailer worth around 23 billion euros ($25.85 billion), with sales of 61.5 billion euros ($69.3 billion) from 6,600 stores.

If successful, the combined company would rank close to the top 10 of North American retailers, but still behind market leaders like Wal-Mart, Costco and Kroger , according to Deloitte.

Tie-up talks between the food retailers, which jointly make around two-thirds of sales in the United States, failed in 2007, but analysts expect them to succeed this time because Delhaize's founding family is now more receptive to a tie-up.

"There is strong argument for the potential merger given the contiguous geographic exposure of both the grocers in the U.S. as well as in Europe," said Citi analyst Pradeep Pratti, who rates Ahold "buy". ABN Amro said cost savings imply 35 percent upside on the current combined market capitalisation.

Ahold and Delhaize, which issued identical statements confirming media reports they were in talks, did not release further details of any transaction.

Ahold, with more than double the market value of its Belgian rival, could issue shares to fund the deal, Pratti said.

Shares in both companies, which soared on the weekend media reports on Monday, rose again on Tuesday. Ahold was up 1.9 percent and Delhaize rose 1.4 percent, while Belgian rival Colruyt fell 1.5 percent.

Analysts said a deal could be a precursor to splitting the merged business into a European retailer and a North American one.

PRICING POWER

Several European retailers have agreed sourcing partnerships recently as they seek to match the buying power of huge discounters like Germany's Aldi and Lidl.

But there has been little merger activity of late as big players, such as Carrefour (Paris: FR0000120172 - news) , Tesco (Xetra: 852647 - news) and Metro , have focused on revamping their domestic businesses to fight the discounters and adapt to a shift in habits towards online and convenience shopping and away from superstores.

Ahold has been trying to differentiate itself from competitors at home and abroad by focusing on fresh produce and also investing heavily in ecommerce.

Delhaize, which also owns the Hannaford chain in the United States, last month reported lower-than-expected operating profit in the first quarter due to heavy competition and strikes at its Belgian business.

Bernstein analyst Bruno Monteyne, who rates Ahold "buy", said he did not see enough overlap between the businesses to justify a deal, which he said risked distracting management.

"This seems at first sight a bad deal for Ahold to us, fraught with lots of execution risk and benefiting from very limited cost saving advantages, likely to go the same way as most other historical big food retail M&A," he wrote.

Since buying Safeway in 2003, shares in Britain's Morrisons have barely improved, while Carrefour's are half of what they were before its 15.9 billion euro purchase of French rival Promodes in 1999, according to Thomson Reuters data.

Despite the risks, the Delhaize founding family, which is estimated to hold about a 20 percent stake, is seen as more open to a deal than a decade ago, while its control of the company has weakened as its delegated directors on the board, former CEO Pierre Olivier Beckers and board member Didier Smits, are due to be succeeded by external directors.

Any deal would be the crowning achievement of Dick Boer, a 57-year-old Dutchman, who took over as Ahold chief executive in 2011 after a stint heading up the Europe business and searching for acquisitions.

Boer joined Ahold in 1998 was part of the team that rebuilt Ahold following an accounting scandal in 2003. ($1 = 0.8898 euros) (Writing by Emma Thomasson; Editing by Philip Blenkinsop Mark Potter)