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10/14/2022

Kroger Purchasing Rival Albertsons for $24.6 Billion

Together, the companies would have a combined market cap of around $47 billion. Kroger is the largest grocery store operator in the U.S.
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Logos for Albertsons, Kroger
  • Kroger, the largest grocery store owner in the U.S., has reached a deal to acquire rival Albertsons. 
  • Kroger owns its namesake brand and other popular brands like Harris Teeter, while Albertsons owns its namesake brand and other chains such as Safeway.
  • In total Albertsons and Kroger employ over 710,000 people and operate nearly 5,000 stores.

The major grocery store owners Kroger and Albertsons, which individually have several popular grocery brands in the U.S., announced a plan to merge on Oct. 14.

Kroger in a release said it reached a deal to purchase Albertsons for $34.10 per share, which puts the deal’s price tag at $24.6 Billion. As part of the deal, Kroger will assume all of Albertson’s $4.7 billion net debt, according to the release. Kroger said it expects to invest $1.3 billion in Alberson’s stores.

Kroger is the largest grocery store operator in the U.S. The deal creates a company more poised to compete with Walmart, which is the largest grocery retailer in the U.S.

Kroger’s portfolio includes grocery chains across the country, including popular brands like Ralphs, Dillons, King Soopers, Fry’s, City Market and Mariano’s. Combined, the two grocers have a reach of 85 million customers, the release said. In total, Kroger has 2,800 stores across 35 states that operate under more than two dozen banners. In addition to its namesake brand, Albertsons owns several popular grocery chains, including Safeway, Vons, Shaw’s, Acme, Kings Food Markets and Balducci’s. Albertsons in total operates 2,200 supermarkets in 34 states and Washington, D.C., under 20 total names.

"We are bringing together two purpose-driven organizations to deliver superior value to customers, associates, communities and shareholders," said Rodney McMullen, Kroger chairman and CEO, in a release. "Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores. This merger advances our commitment to build a more equitable and sustainable food system by expanding our footprint into new geographies to serve more of America with fresh and affordable food and accelerates our position as a more compelling alternative to larger and non-union competitors.”

Rodney will continue to serve in the same role at the new combined company, the release said.

The news was first reported earlier in the week by Bloomberg, which said that a planned all-cash acquisition of Albertsons by Kroger could be announced as soon as Friday morning. Kroger, which is based in Ohio, has a market cap of around $32 billion compared to Idaho-based Albertsons’ market cap of around $15 billion, CNBCreported—meaning the grocery chains combined would have a market cap of $47 billion. Kroger has over 400,000 employees, while Albertsons has around 300,000 employees.

The boards of both companies unanimously supported the merger, which will need regulatory approval before it is complete.

“If a deal is announced, expect plenty of antitrust scrutiny as the two grocers have plenty of store overlap in several of the markets they compete in,” said CFRA research analyst Arun Sundaram in a research note on Thursday, according to the Cincinnati Business Courier. Also, regulators are likely to question whether consolidation could stifle competition and drive food prices even higher.”

Kroger earlier this year launched a series of digital initiatives, Retail Leader previously reported. It leveraged OneView’s headless Unified Commerce platform and capabilities to finalize its digital orders and power its e-commerce pickup and delivery experiences at 1,000 Kroger locations. Grocery retailers, like Kroger, expanded online and pick-up options during the COVID-19 pandemic. The grocer in 2018 partnered with Ocado to help it build fulfillment centers to fulfill online grocery orders. It currently has centers in just under a dozen states, according to Ocado.