Grocery giant Kroger announced will acquire Albertsons on Friday in a deal that could reshape the U.S. grocery industry.
The deal unites the country’s two largest supermarket chains, which have been forced to choose between further slashing profits or their customers’ wallets due to rising inflation and competition from Walmart and Amazon.
Kroger said he would pay $34.10 per share to acquire Albertsons, valuing the company at about $24.6 billion including debt. That’s about 20% higher than Thursday’s closing price for Albertsons shares, which had already climbed on reports that a deal with Kroger was underway.
Albertsons and Kroger have 222 years of grocery experience and have been weighed down by the expansion into the industry of strong retailers. Total annual revenue of $209 billion matches Walmart’s total grocery sales of $218 billion last year.
In a joint statement, Kroger and Albertsons said, “Through our Banner family of well-known and trusted supermarkets, this combination will expand our customer reach and proximity to deliver fresh, affordable food to nearly 85 million households.” improve.
But the proposed merger is likely to invite antitrust investigations by regulators, which have focused on the potential power of big companies to influence consumer prices. Although it is expected to propose a sale, Federal Trade Commission head Rina Khan is likely to consider a deal and believes such a solution would be sufficient to address antitrust concerns. I am skeptical.
Cincinnati-based Kroger operates 2,750 grocery stores nationwide under the banners of Ralphs, Dillons, Harris Teeter and others, with a market capitalization of approximately $32 billion. Based in Boise, Idaho, Albertsons operates 2,200 supermarkets under names such as Albertsons, Safeway and Vons, with a market capitalization of approximately $15 billion.
Consumer protection groups quickly spoke out against the Kroger-Albertson merger when news reports surfaced about the possibility on Thursday. The American Economic Liberties Project, a nonprofit that promotes antitrust law, criticized it as “a bad deal for consumers, workers and communities.”
“There is no reason to allow two of the country’s largest supermarket chains to merge, especially with food prices already soaring,” said Sarah Miller, an executive at the group, in a statement Thursday.