Grocery Merger
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Kroger and Albertsons, Owners of Grocery Chains Mariano's and Jewel, Have Agreed to Merge
Two of the nation’s largest grocers have agreed to merge in a deal that would help them better compete with Walmart, Amazon and other major companies that have stepped into the grocery business.
Kroger on Friday bid $20 billion for Albertsons Companies Inc., or $34.10 per share. Kroger will also assume $4.7 billion of Albertsons’ debt.
Albertsons shares had closed Thursday at $28.63 after surging on reports that a deal was imminent.
According to CNBC, the deal is valued at $24.6 billion.
Both companies' boards unanimously approved the agreement, which will need regulatory approval.
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.
Kroger, based in Cincinnati, Ohio, operates 2,800 stores in 35 states, including brands like Ralphs, Smith’s and Harris Teeter.
Albertsons Merger With Kroger Could Be Announced This Week
In the Chicago area, Kroger owns and operates Mariano's grocery stores.Alberstons, based in Boise, Idaho, operates 2,220 stores in 34 states, including brands like Jewel Osco, Shaw’s and Safeway.
Together the companies employ around 710,000 people.
The deal will likely get heavy scrutiny from U.S. antitrust regulators, especially at a time of high food price inflation. If approved, the deal is expected to close in early 2024.
Together, the stores would control around 13% of the U.S. grocery market, assuming the sale or closure of around 400 stores for antitrust reasons, according to J.P. Morgan analyst Ken Goldman.
Still, that is a distant second to Walmart’s 22% share. Amazon, which bought Whole Foods in 2017, is also a growing player in the space, with 3% share. Warehouse store Costco controls 6%.
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Appears that these are the two biggest "pure" grocery stores in the US?
Is this a good thing or bad thing that they are moving together?
