Two of the nation's largest grocers have agreed to merge in a deal they say would help them better compete with
Kroger on Friday bid
“We will take the learnings from each company to bring greater value and a better experience to more customers, more associates, and more communities," McMullen said Friday in a conference call with investors.
Shares of
Kroger, based in
The deal will likely get heavy scrutiny from
If approved by regulators, the deal is expected to close in early 2024.
To ease the regulatory process, Kroger and Albertsons said they would divest stores in markets where they overlap. The companies said they would spin off up to 375 Albertsons stores in a standalone public company.
“We are confident, from the extensive work that we’ve done, that we have a clear path to achieve regulatory approval with divestitures," Kroger Chief Financial Officer
McMullen said the company would decide market-by-market whether stores would change their names.
“We'll want to evaluate each market individually, who has the stronger market share," he said.
Together, the stores would control around 13% of the
Still, that is a distant second to
Value chains like
Goldman said a stronger combined company could possibly help tame food price inflation, since it would have more power to reject food producers’ price increases. The two chains combined have 34,000 private label products at various price points that compete directly with food manufacturers.
Kroger said the combined stores also would provide greater and faster access to fresh food, with a total of 66 distribution centers and 52 manufacturing plants. Together, the stores operate in 48 states and the
Kroger said it would reinvest about
Some grocery workers expressed concern about the plan, which would inevitably bring store closures. The majority of Kroger's hourly workers are unionized with the
“The proposed merger of these two grocery giants is devastating for workers and consumers alike and must be stopped," said
Three miles from the union's headquarters in
Critics also questioned a merger at a time of high food price inflation. Food prices rose 13% in September compared with last year, according to
“A Kroger-Albertsons deal would squeeze consumers already struggling to afford food, crush workers fighting for fair wages and destroy independent, community stores,” said
It was no secret that Albertsons was thinking about selling the company. The chain announced in February that its board was reviewing options to enhance shareholder value, including developing new businesses or a sale.
And both Albertsons and Kroger themselves have grown into huge operations partially through acquisitions.
Albertsons was bought by a consortium of investors including
Cerberus currently holds nearly 30% of Albertsons shares. The merger deal includes a
In 2015 alone, Kroger purchased four chains: Roundy’s, Pick ’N Save, Metro Markets and Mariano’s. It bought the meal kit company Home Chef in 2018.
Kroger has long outperformed Albertsons in key areas, including the development of store brands and advanced technology, said
But Saunders said Albertsons allows Kroger to expand into markets where it has less presence, like
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