$25B Kroger-Albertsons Merger Deal Could Spin Off 400 Stores

A $25 billion merger deal was struck between two of the biggest supermarket chains in the country, a move anticipated to force the divestiture of 400 locations to keep regulatory scrutiny at bay.

Kroger bid $34.10 per share, or $20 billion, for Albertsons and will also assume $4.7 billion of the supermarket’s debt, according to a press release on Friday (Oct. 14).

“We are bringing together two purpose-driven organizations to deliver superior value to customers, associates, communities and shareholders,” said Kroger CEO and Chairman Rodney McMullen, who will continue serving in the same capacity of the combined company.

“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,” he added.

See also: Kroger, Albertsons Reportedly in Talks to Join Forces Against Walmart

The supermarket giants said they could better compete as a combined entity against rivals like Walmart, Amazon and other major companies that have moved into the grocery-selling space, PYMNTS reported on Thursday (Oct. 13) when talks of a possible merger were first revealed.

Headquartered in Boise, Idaho, Albertsons has over 2,220 stores in 34 states and 270,000 employees, making it the fourth-largest supermarket chain with a 5.7% market share, per Numerator data. It includes brands like Safeway, Jewel Osco and Shaw’s.

Kroger is headquartered in Cincinnati, Ohio and 2,721 retail locations in 35 states. Kroger includes brands like Ralphs, Smith’s and Harris Teeter. The supermarket has a 9.9% market share.

Read more: Kroger Boosts eCommerce Efforts; DoorDash Drives Sales With DoubleDash

Kroger ranks second by market share as the biggest grocery store in the country, behind Walmart. Costco ranks third, followed by Albertsons, per multiple reports. Walmart has a 22% share, compared to Amazon’s 3% and Costco’s 6%. Aldi and Dollar General have a combined 4% market share, per reports.

The boards of both companies unanimously approved the merger deal. If approved by regulators, it is expected to close in early 2024 and would result in the stores controlling 13% of the U.S. grocery market — based on the assumption that 400 stores are spun off for antitrust reasons, J.P. Morgan analyst Ken Goldman said, according to multiple media reports on Friday (Oct. 14).

“There is no reason to allow two of the biggest supermarket chains in the country to merge — especially with food prices already soaring,” Sarah Miller, executive director of the American Economic Liberties Project, said in a press release on Friday (Oct. 14).

“With 60% of grocery sales concentrated among just 5 national chains, a Kroger-Albertsons deal would squeeze consumers already struggling to afford food, crush workers fighting for fair wages, and destroy independent, community stores. This merger is a cut-and-dry case of monopoly power, and enforcers should block it,” she said.