Kroger's $24.6B Merger With Albertsons Creates One Of America's Largest Grocery Chains
Grocery giant Kroger announced its plans to acquire Albertsons on Friday, creating one of the United States' largest grocery store chains.
The merger will face scrutiny from antitrust regulators. If approved, the deal is predicted to close by the end of 2024, with Kroger purchasing Albertsons in a $24.6M deal. Outside of Amazon and Walmart, Kroger and Albertsons are two of the largest grocery retailers in the United States.
Following the announcement of the merger, Kroger shares dropped 7.38%. Albertsons shares fell 7.79%.
Kroger is the largest supermarket chain, with over 420,000 employees and over 2,700 stores. Based in Cincinnati, Ohio, Kroger owns multiple chains across the United States, including Ralphs, Frys, and Dillons. Alberston's is headquartered in Boise, Idaho, and it serves as the parent company for grocery chains like Safeway.
The two companies have a combined 710,000 employees, 5,000 stores, and $200 billion in sales. Kroger's bid to purchase Albertsons Companies Inc. equates to $34.10 per share. Kroger would also assume Albertson's debt of $4.7 billion.
"We are bringing together two purpose-driven organizations to deliver superior value to customers, associates, communities, and shareholders," said Kroger Chairman and CEO Rodney McMullen in Kroger's formal press release Friday.
The merger comes amid mounting pressure from retail giants like Amazon and Walmart. Amazon acquired Whole Foods for $13.4 billion in 2017. The combined market share of Kroger and Albertsons in the grocery industry would be just over 13%, placing it second behind Walmart's 15.5% share.
Labor and consumer advocates have been vocal in their criticism of the deal, stating it could have a detrimental effect on shoppers, potentially raising food prices as the economy deals with already high inflation rates and a looming recession.
In a tweet by Democratic Senator Bernie Sanders Friday morning, he called the merger an "absolute disaster" and called on the Biden administration to reject the deal.
The Federal Trade Commission analyzed grocery information from major supermarkets and whole sellers to determine why prices continue to rise with a lack of supply.
In July of 2021, President Joe Biden signed an executive order focused on maintaining competition in American business and oversight of mergers and acquisitions.
In 2018, Albertsons and pharmaceutical provider Rite Aid terminated a proposed $24B merger.
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