Grocery store giants Kroger and Albertsons will merge into a single company.
Driving the news: Kroger announced on Friday it plans to purchase Albertsons in a $24.6 billion deal. The deal will merge two of the nation’s largest grocery stores.
- The deal is expected to close in 2024. If the deal goes through, it will be one the the biggest retail mergers in recent years, according to CNN.
- “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,” Kroger said in a press release.
What would this merger look like? If the two companies merge, they will have a combined value of about $47 billion, with about 5,000 grocery stores and 710,000 employees.
- Kroger has 25 banner stores including Fred Myer’s, Ralphs and namesake stores. Albertsons trails slightly behind with 22 banner stores including Safeway, Acme and namesake stores.
- This merger will make the Kroger company the third largest retail chain in America by sales.
- Kroger plans to invest half a billion dollars into reducing prices for its customers and $1 billion towards raising associate wages and benefits.
Why is this merge controversial? Kroger will need to pass an antitrust test from the Federal Trade Commission before the deal is completed.
- “There is a significant risk of a challenge,” said Andre Barlow of law firm Doyle Barlow and Mazard, according to U.S. News and World Report. “This is the type of deal that the FTC wants to discourage.”
- During a conference call on Friday, company executives said they have everything under control, saying, “We have a clear path to achieve regulatory approval with divestitures.”
- The FTC began actively looking into antitrust practices in the grocery store industry last year, CNN reported. There were concerns with empty shelves and spikes in prices at massive grocery store chains such as Walmart and Amazon.
How will the merger impact Utahns? Utah Sen. Mike Lee released a statement today promising to enforce antitrust laws amid such a merger.
- “I will do everything in my power to ensure our antitrust laws are robustly enforced to protect consumers from anticompetitive mergers that could further exacerbate the financial strain we already feel in the grocery store checkout aisle,” Lee said.
Details: The deal comes as grocers have dealt with inflation and supply chain issues during the COVID-19 pandemic.
- On Thursday, Kroger stock rose by 5% on Friday, and Albertsons dropped by 7%.