Albertsons

History

2022: Kroger bought Albertsons for $25 billion

On October 14, 2022, the American supermarket chain Kroger announced a deal to buy rival retailer Albertsons. After the merger, a giant will be formed that will be able to match Walmart in terms of network size and turnover.

Kroger operates approximately 2,750 stores in the United States: they operate under various brands, including Ralphs, Dillons and Harris Teeter. Market capitalization is estimated at $32 billion. In turn, the Albertsons chain brings together approximately 2,200 supermarkets, including under the Safeway and Vons brands. The capitalization of this company is about $15 billion.

Kroger bought a competitor for $25 billion

Under the terms of the agreement, Kroger will pay $34.1 for each Albertsons security, which is 33% more than the value of the shares of the acquired company as of October 12, 2022. Thus, the total amount of the transaction will be $24.6 billion. The merger is scheduled to be completed in early 2024 after obtaining the necessary approvals from regulators.

However, market participants say the parties may face difficulties related to antitrust laws. The fact is that the formation of such a large trading network can negatively affect the competitive environment. In this regard, Kroger has already announced that it intends to reinvest about $0.5 billion saved through synergy of business processes to reduce prices for end consumers. In addition, $1.3 billion will be gradually invested in Albertsons. The combined company is expected to provide goods and products to 85 million American households.

It should be noted that the total revenue of Kroger and Albertsons in the last financial year amounted to approximately $209 billion. For comparison: Walmart sales amounted to $218 billion. In other words, the two giants will become direct competitors.^[1][2]

Notes

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