![]() Kroger will also assume $4.7 billion of Albertsons' debt. Kroger on Friday bid $20 billion for Albertsons Companies Inc., or $34.10 per share. Two of the nation's largest grocers have agreed to merge in a deal they say would help them better compete with Walmart, Amazon and other major companies that have stepped into the grocery business. Albertsons emerged from Cerberus’s portfolio when it held an initial public offering in 2020Ĭincinnati-based Kroger, meanwhile, grew less sharply than Albertsons through the coronavirus pandemic but has held on to more of its gains.King Soopers, Safeway parent companies agree to merge in $20 billion deal 01:55 The grocer is still almost 30% owned by Cerberus Capital Management, the New York private equity firm that first invested in the business in 2006. It also operates grocery chains such as Safeway, Jewel-Osco and Market Street. The cost to protect Kroger debt against default also rose by the most in more than three years on the news.Īlbertsons in February announced a strategic review of its businesses, which include the Acme, Tom Thumb and Shaw’s chains as well as its eponymous stores, that raised the prospect of potential disposals to help create value for shareholders. Kroger rose 1.2% to $46.57, giving the company a market value of about $33.3 billion. The stock closed up 11.5% to $28.63 in New York trading Thursday, giving the company a market value of about $15.2 billion. Its shares rose as much as 14% on Thursday. Studying optionsīoise, Idaho-based Albertsons has been studying options to boost growth, having seen sales gains during the Covid-19 pandemic cool at the same time as labor and logistics expenses have been rising. “At Sam’s Club it’s over 75%.”Ī potential tie-up would give the combined entity increased purchasing power, a sprawling shopper-loyalty program and greater heft in technology investments as online grocery sales increase. “Costco’s supermarket sales went from 20% of their overall sales to 70%,” he said. And drug stores and discount chains like 99 Cents Only have also upped their grocery inventories, Flickinger said. “Now it’s 22% to 25%.”īig-box retailers like Walmart, Costco and Sam’s Club have picked up an increasing share of grocery business. “Twenty-five years ago, Kroger and Albertsons/Safeway had a combined market share of over 60%,” he said. ![]() That could set the stage for significant store divestitures in some parts of the country.īurt Flickinger III, managing director for the retail consulting firm Strategic Resource Group, figures that won’t be as big an issue as some might think, given the erosion in market share the two companies have weathered in recent decades. The two companies have particularly similar footprints on the West Coast, according to Rupesh Parikh, an analyst at Oppenheimer & Co. 2 grocery seller, with a 9.9% market share compared with Walmart Inc.’s almost 21%, according to Numerator. “If you think about the store bases of the two respective entities, there is a lot of overlap in very competitive markets.” “This is the type of transaction that really looks good on paper, but the actual practicality of achieving regulatory approval by the FTC could be difficult,” said Jennifer Bartashus, an analyst at Bloomberg Intelligence. That could present a number of political and regulatory hurdles for this kind of tie-up, as politicians blame corporate greed for higher prices, while antitrust officials eye tougher merger rules. ![]() Soaring food prices are a key driver behind inflation in the US, while industry consolidation has given top players in the space much greater market share. These talks come amid a dramatically different dealmaking landscape. It has more than 2,200 supermarkets in 34 states and Washington, D.C., with about 290,000 employees, 25,000 of whom work in California. by revenue.Īlbertsons is made up of 20 brands, including Safeway, Acme and Tom Thumb. The company trails behind Walmart, which is the top grocer in the U.S. It has nearly 2,800 stores in 35 states and about 420,000 employees. Kroger is the nation’s largest supermarket chain with about two dozen banners, including Fred Meyer, Ralphs, King Soopers, Harris Teeter and its namesake brand. Standing together, we know our voices are stronger than the corporations’ anti-worker rhetoric.” ![]() Essential UFCW grocery store workers emerged stronger from the COVID-19 pandemic, winning landmark protections against the virus, store violence and other threats. “The proposed merger of these two grocery giants is devastating for workers and customers alike and must be stopped,” Zinder said in a statement issued Thursday. ![]()
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