Kroger and Albertsons Announce Merger That Creates US Supermarket Giant
With a value of $ 24.6 billion, the operation will create a company with annual revenues of $ 210 billion
On Friday, the 14th, two of the biggest supermarket chains in the United States announced plans to merge. Retailer Kroger will acquire all of the outstanding shares of Albertsons Companies, Inc. common and preferred stock (on an as converted basis) for an estimated total consideration of $34.10 per share, implying a total enterprise value of approximately $24.6 billion.
“This combination will expand customer reach and improve proximity to deliver fresh and affordable food to approximately 85 million households with a premier omnichannel experience,” said Kroger in a press release.
The merger will create an industry giant with 710,000 employees, 4,996 stores and annual sales of $ 210 billion — considering total sales for 2021.
Kroger is the second-largest grocer by market share in the United States, behind Walmart, and Albertsons is fourth, after Costco. Together, Kroger and Albertsons would be a closer second to Walmart.
Both companies’ boards unanimously approved the agreement, which will also need regulatory approval.
The companies said they plan to continue with their shared track record to lower prices, enhance customer experience and increase associate wages and benefits.
In a statement, Kroger Chairman and CEO Rodney McMullen said, “Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores.” He added that “as a combined entity, we will be better positioned to advance Kroger’s successful go-to-market strategy” with respect to their seamless shopping experience, portfolio of brands, and personalized value and savings.
According to Kroger, the acquisition accelerates the “go-to-market” strategy and positions the combined company as a “first-line” omnichannel food retailer, in addition to continuing the plan to reduce the prices of products sold – which has at the center of concerns for Americans who are having to deal with rising inflation.
The practice of lower prices will be possible due to the synergy gains in cost reduction, the company says. Kroger expects to reinvest approximately $500 million in cost savings to lower prices for customers. The company also projects that US$ 1.3 billion will be invested in Albertsons Cos. to improve the customer experience and an additional $1 billion to continue raising associate wages and comprehensive benefits.
The transaction is expected to close in early 2024, subject to required regulatory clearance and closing conditions, according to the company’s investor relations site.
