Kroger, Albertsons to merge in $24.6B deal
Kroger and Albertsons combined employ more than 710K people
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Grocery chain Kroger will buy rival Albertsons in a deal valued at $24.6 billion, the companies announced on Friday.
"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," Kroger CEO Rodney McMullen, who will continue to lead the combined company, said in a statement.
McMullen said the companies believe the move will lead to "faster and more profitable growth and generate greater returns for our shareholders."
The deal still requires regulatory approval.
Together the companies employ over 710,000 people and operate nearly 5,000 stores across 48 states and the District of Columbia.
GROCERY CHAINS KROGER, ALBERTSONS IN TALKS FOR POSSIBLE MERGER: REPORT
Kroger
"Given the similarities in the culture and values at Kroger and Albertsons Cos., I am confident that the combination will also have a positive impact on our associates and the communities we are proud to serve," Albertsons CEO Vivek Sankaran said in a statement.
HOUSTON, TEXAS - SEPTEMBER 09: A Kroger grocery store is seen on September 09, 2022 in Houston, Texas. Kroger stock increased six percent as the company has surpassed profit and sales expectations. ((Photo by Brandon Bell/Getty Images) / Getty Images)
The deal will up the ante in the food shopping space challenging rivals including Amazon-owned Whole Foods as well as Walmart, Target and Costco.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AMZN | AMAZON.COM INC. | 197.12 | -1.26 | -0.64% |
| WMT | WALMART INC. | 90.44 | +2.04 | +2.31% |
| TGT | TARGET CORP. | 125.01 | +3.42 | +2.81% |
| COST | COSTCO WHOLESALE CORP. | 964.01 | +8.36 | +0.87% |
Under the terms of the agreement, Kroger is acquiring Albertsons for $34.10 per share and also assuming approximately $4.7 billion of Albertson's net debt.
Oranges are displayed for sale in the produce section of an Albertsons Cos. grocery store in San Diego, California, U.S. on Monday, June 22, 2020. Existing shareholders of Albertsons Cos., including Cerberus Capital Management, are seeking as much as (Photographer: Bing Guan/Bloomberg via Getty Images / Getty Images)
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Kroger said the agreement accelerates its "go-to market strategy" and that it plans to invest in lowering prices going forward, reinvesting around half a billion dollars of cost savings to do so.
Albertsons signage outside a supermarket in Las Vegas, Nevada, U.S., on Friday, Jan. 7, 2022. Albertsons Cos is scheduled to release earnings figures on January 11. (Photographer: Bridget Bennett/Bloomberg via Getty Images / Getty Images)
In addition, an incremental $1.3 billion will also be invested into Albertsons stores to enhance the customer experience.
Kroger will also build on its recent investments in associate wages, training and benefits, expecting to invest $1 billion to continue that effort.
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Albertsons is also prepared to establish a subsidiary, SpinCo, that would be spun-off to Albertsons shareholders immediately before merger closing and operate as a standalone public company.
Kroger and Albertsons will work to determine which stores would comprise SpinCo, which is estimated to be between 100 and 375 stores.