Grocery giant Kroger announced plans on Friday to acquire Albertsons in a deal that could reshape the grocery landscape in the United States.
The deal will merge the country’s two largest supermarket chains, which have been forced by rising inflation and competition from Walmart and Amazon to choose between further cuts to their profits or customers’ wallets. .
Kroger said it 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 Albertsons stock’s close on Thursday, which was raised when it was reported that the deal with Kroger was In the work.
Albertsons and Kroger, with 222 years of grocery sales experience, have been pinched by the expansion of high-energy retailers into the industry. Their $209 billion in combined annual sales would put them on par with Walmart’s grocery sales, which totaled $218 billion last year.
“Through a group of popular and trusted supermarket banners, this combination will expand customer reach and improve proximity to provide fresh and affordable food for around 85 million households,” Kroger and Albertsons said in a joint statement.
But the proposed merger would likely invite antitrust scrutiny from regulators, who have been focusing on big companies’ potential power to influence consumer prices. . Kroger and Albertsons are expected to propose selling off certain stores, but Lina Khan, the head of the Federal Trade Commission, which is likely to review any deal, has expressed nostalgia. doubt that such solutions are sufficient to address antitrust concerns.
Kroger, based in Cincinnati, operates 2,750 grocery stores across the United States under banners that include Ralphs, Dillons and Harris Teeter and has a market capitalization of about $32 billion. Albertsons, based in Boise, Idaho, operates 2,200 supermarkets under names like Albertsons, Safeway and Vons and has a market capitalization of about $15 billion.
Consumer advocacy groups immediately voiced opposition to the Kroger-Albertson merger when news reports emerged on Thursday about the possibility. The American Economic Freedom Project, a nonprofit that promotes antitrust law, has criticized it as “a bad deal for consumers, workers, and the community”.
Sarah Miller, the group’s chief executive, said in a statement on Thursday: “There is no reason to allow two of the largest supermarket chains in the country to merge – especially given real prices products have skyrocketed.
