Kroger Announces Agreement to Merge with Albertsons to Form Supermarket Mega Chain

New York
CNN Business

Kroger announced Friday that it plans to buy Albertsons in a nearly $25 billion deal that could change the US retail industry and impact the way millions of customers shop for groceries.

The deal, expected to close in 2024, would combine two of the country’s largest supermarket chains and create one of its largest private employers. The two companies have a combined 710,000 workers, most of them unionized in an industry with low union rates, nearly 5,000 stores and more than $200 billion in sales.

The retail industry has consolidated in recent years, and the merger would give companies greater scale to fend off competition from Amazon.


and other retail giants.

The merger “accelerates our position as a more compelling alternative to larger, non-union competitors,” Kroger CEO Rodney McMullen said in a statement Friday.

The move also comes as businesses struggle with higher costs and food inflation reaches its highest level in decades. Prices at grocery stores continued to rise last month. The Household Food Index, a gauge of grocery store prices, rose 0.7% in September from the previous month and 13% During the past year.

“The combined company could be more productive and profitable than either of them individually,” Joseph Feldman, a retail analyst at Telsey Advisory Group, said in a note to clients on Friday. Expansion into new geographies, new business growth and the combination of technology and supply chains could drive growth, he said.


will buy Albertsons for $34.10 a share, a premium of about 30% above the supermarket chain’s average share price over the past month. Kroger Stock

fell 2% in premarket trading, while Albertsons soared more than 11%.

The companies said they will spin off nearly 400 stores to form the new rival in an effort to gain antitrust clearance.

But analysts say it will be a major hurdle to passing the antitrust test.

“A deal of this size that directly impacts consumers would face significant scrutiny from regulators and would take a long time to approve,” Feldman said.

Consumer watchdogs, unions and Democrats have already come out strongly against the deal.

Senator Bernie Sanders called it a “absolute disaster” and called on the Biden administration to reject the deal. The American Economic Freedoms Project, an antitrust organization, said “the merger would be disastrous for market competition, small businesses, and especially consumers’ pocketbooks.”

FTC Chair Lina Khan is critical of corporate consolidationand the regulator has blocked big retail mergers in the past, including attempts by Staples to combine with Office Depot.

The FTC is currently investigating Anticompetitive practices in the food industry. and requested information last year from Kroger and others about the causes of empty shelves and rising prices in the United States.

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