Kroger buys rival grocery company Albertsons for $24.6 billion

Put together, Kroger and Albertsons employ more than 700,000 people across about 5,000 stores
Kroger buys rival grocery company Albertsons for $24.6 billion

Rival grocers Kroger and Albertsons announced plans to team up on Friday. The companies said Kroger agreed to buy Albertsons for $34.10 a share in a deal valued at $24.6 billion. Albertsons shares had closed Thursday at $28.63 after surging on reports that a deal was imminent.

Kroger is the second-largest grocer by market share in the United States, behind Walmart, and Albertsons is fourth, after Costco. Together, Kroger and Albertsons would be a closer second to Walmart. Both companies’ boards unanimously approved the agreement, which will also need regulatory approval.

The tie-up comes during a challenging time in the grocery industry. Supermarkets have raced to keep up as shoppers embrace new ways of restocking the fridge. Companies have had to invest in automation, employee training, and more as consumers bounce between browsing store aisles, ordering home deliveries, and using curbside pickup.

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Grocers have also been hit hard by inflation. Food prices have jumped 11.2% from a year ago, according to the most recent Bureau of Labor Statistics data. Companies have had to weigh when to pass on higher costs to customers and when to absorb them to stay competitive.

THE TWO COMPANIES BY THE NUMBERS

Kroger and Albertsons also each have numerous store banners, including names that the operators have acquired over the years. Kroger’s banners include Fred Meyer, Ralphs, and King Soopers, and Albertsons’ banners include Safeway, Acme, and Tom Thumb.

Combined, Kroger and Albertsons employ more than 700,000 people across about 5,000 stores. Kroger captured about 9.9% of the US grocery market in the 12 months that ended June 30, according to market researcher Numerator. Albertsons’ share was 5.7%. The next three big players after Albertsons are Ahold-Delhaize, Publix, Sam’s Club, and Target. Ahold Delhaize’s banners include Food Lion and Stop & Shop, along with Fresh Direct, an online grocer that it acquired.

Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores,” Kroger CEO Rodney McMullen said in a news release announcing the deal.

Source: ©Kroger

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