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Kroger and Albertsons have agreed on a deal that will combine the first and second largest supermarket operators in the U.S.
The deal valued at $24.6 billion will see Kroger pay $34.10 a share for Albertsons’ stock, which closed at $28.63, CNBC reports.
The merger, whose talks were first reported by Bloomberg, represents the biggest deal in the grocery industry since 2006 when Albertsons was acquired by Supervalu, CVS and investment firms for about $9.8 billion. Albertsons earlier this year said it was reviewing “strategic alternatives” under the belief that the company was undervalued.
Kroger and Albertsons, as currently configured, operate 2,723 and 2,273 stores respectively, according to Supermarket News.
Kroger operates stores under its namesake banner as well as Baker’s, City Market, Dillons, Food 4 Less, Foods Co., Fred Meyer, Fry’s, Gerbes, Harris Teeter, Jay C, King Soopers, Mariano’s, Metro Market, Owen’s, Pay Less, Pick N’ Save, Ralph’s and Smith’s.
Albertsons’ roster includes its namesake stores as well as Acme, Balducci’s Food Lovers Market, Carrs, Haggen, Jewel-Osco, Kings Food Markets, Pavilions, Randalls, Safeway, Shaw’s, Star Market, Tom Thumb, United Supermarkets and Vons.
Kroger accounts for nine percent of the U.S. grocery market and Albertsons has a 4.5 percent share, according to data from Insider Intelligence. In comparison, Walmart holds a 25 percent share of the market, according to Euromonitor figures as reported by Reuters.
The Kroger and Albertsons merger is expected to give the combined company greater buying power and the means to remove duplicative costs.
The deal will invite regulatory scrutiny and likely store divestitures as the two companies have a significant overlap in key markets including Chicago, Dallas and Los Angeles. The Federal Trade Commission has been investigating anticompetitive behavior in the grocery industry, and independent grocers represented by the National Grocers Association have been lobbying the Biden administration and Congress to level the playing field through enforcement of the Robinson-Patman Act.
Sara John, a senior policy scientist at the Center for Science in the Public Interest, told The Wall Street Journal that a Kroger and Albertsons merger would reduce competition in the markets where the companies operate. She voiced concerns that reduced competition would lead to higher prices for consumers already struggling with food inflation.
- Kroger agrees to buy rival grocery company Albertsons for $24.6 billion – CNBC
- Kroger Wants to Merge With Albertsons to Create US Grocery Giant – Bloomberg
- U.S. grocer Kroger in talks to merge with rival Albertsons - sources – Reuters
- Kroger and Albertsons in Deal Talks to Create Supermarket Powerhouse – The Wall Street Journal
- Kroger, Albertsons reportedly in merger talks – Supermarket News
- FTC commissioner says it’s time to enforce the Robinson-Patman Act – RetailWire