Rival grocery companies Kroger and Albertsons announced they have come to a merger agreement that would combine two of the nation’s largest grocers. The cost of the deal is $20 billion, with Kroger assuming $4.7 billion of Albertsons’ debt.
“We are bringing together two purpose-driven organizations to deliver superior value to customers, associates, communities and shareholders,” Kroger Chairman and CEO Rodney McMullen said in a statement. “Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores.”
Kroger operates 2,800 stores in 35 states, including brands like Ralphs, Smith’s and Harris Teeter. Albertsons operates 2,220 stores in 34 states, including brands like Safeway, Jewel-Osco and Shaw’s. Together the companies employ around 710,000 people. According to J.P. Morgan Analyst Ken Goldman, together the stores would control around 13% of the U.S. grocery market. This is assuming the sale or closure of around 400 stores for antitrust reasons.
“Together with Kroger, our combined iconic banners will be able to provide customers with even more value and greater access to fresh food and essential pharmacy services,” Albertsons CEO Vivek Sankaran said in his own statement. “Given the similarities in the culture and values at Kroger and Albertsons Cos., I am confident that the combination will also have a positive impact on our associates and the communities we are proud to serve. We look forward to working together with Kroger to capture the compelling opportunities ahead.”
With the merger, Kroger and Albertsons said they hope to better compete with Walmart, Amazon and other major companies that have stepped into the grocery business. Walmart currently controls 22% of the grocery market. Amazon, which bought Whole Foods in 2017, is also a growing player in the space, with 3% share. Warehouse store Costco controls 6%.
The deal will likely get heavy scrutiny from antitrust regulators, especially at a time of high food price inflation. If approved, the deal is expected to close in early 2024.
“A Kroger-Albertsons deal would squeeze consumers already struggling to afford food, crush workers fighting for fair wages and destroy independent, community stores,” Sarah Miller, executive director of the American Economic Liberties Project, said.
IN THE WORLD OF BUSINESS…WHEN YOU’VE GOT LITTLE COMPETITION…BUT A LOT OF DEMAND…THAT MEANS THINGS CAN BLOW UP BIG.
SOME WOULD SAY TOO BIG WHERE ANTI-TRUST LAWS CAN WORK TO PREVENT “BIG BUY UPS” TO MANUFACTURE A MORE COMPETITIVE MARKET.
SOCIAL MEDIA OR TECH GIANTS ARE A GOOD EXAMPLE.
AND NOW…ENTER THE GROCER SECTOR.
AS ONE BIG COMPANY LOOKS TO BUY OUT ANOTHER…SHRINKING COMPETITION BUT EXPANDING THEIR BUSINESS.
KROGER HAS ANNOUNCED A DEAL TO ACQUIRE ALBERTSONS.
THE PRICE TAG…24 BILLION DOLLARS.
IT WOULD BE ONE OF THE LARGEST DEALS EVER MADE IN THE INDUSTRY.
BUT SEVERAL DEMOCRATS HAVE ALREADY SOUNDED OFF…AGAINST THE DEAL.
BERNIE SANDERS CALLING IT “AN ABSOLUTE DISASTER.”
AND THE FEDERAL TRADE COMMISSION IS KNOWN TO SHOOT DOWN THIS KIND OF DEAL.
LIKE HOW THEY DID WITH STAPLES TRYING TO MERGE WITH OFFICE DEPOT.
THIS WOULD BOLSTER KROGER UP TO CLOSER COMPETE WITH WALMART AND AMAZON.
BUT ANTITRUST LAWS HAVE CAUSED HESITANCY IN WHETHER THIS DEAL WILL ACTUALLY COME TO FRUITION.
