written by Jake Calhoun, Chain Store Guide
Kroger has purchased rival Albertsons for $24.6 billion in a deal expected to close in early 2024. The combination of two of the largest standalone grocers in the industry will create a giant that is second only to Walmart. It seems clear that Kroger hopes to use this acquisition to directly compete with Walmart on a national level. Both Kroger and Albertsons feature over 20 banner names in their profiles and the combination of these stores will serve most of the U.S.
The sale has already been approved by each company’s respective board of directors and now they are awaiting regulatory approval. It is expected that the sale will face some scrutiny, although it’s not yet clear which of Albertsons’s banner names will remain. Both companies are planning to divest some of their stores in part to curb concerns. Albertsons is planning to spin off some of their stores into a separate company before the deal closes.
Regardless of the final terms of the deal, it is clear that Kroger will become the second largest grocery retailer in the U.S., and they will close the gap with Walmart while also creating distance from rivals Amazon and Costco. Kroger and Albertsons have a significant overlap of stores in the west and the deal will strengthen their foothold. The acquisition will now extend Kroger’s reach into the northeast where they have traditionally lacked a presence.
Inflation has caused food prices to rise astronomically, and the creation of a new grocery conglomerate is unlikely to do Kroger any favors with the public. To address this issue, the company has said that they will invest $500 million in cost saving to reduce prices for consumers. They are also investing $1 billion to increase wages and benefits for their entire workforce. It is unclear which Albertsons executives will complete the transfer over to Kroger; however, current Kroger CEO Rodney McMullen will retain his position and lead the newly combined company.
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