Kroger and Albertsons plan merger to combine 2 largest supermarket chains
A customer exits a Kroger grocery store on Sept. 9 in Houston, Tx. Brandon Bell/Getty Images hide caption
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Brandon Bell/Getty Images
A customer exits a Kroger grocery store on Sept. 9 in Houston, Tx.
Brandon Bell/Getty Images
Kroger plans to buy Albertsons in a deal valued at $24.6 billion, a merger that would combine the two largest grocery-store chains in the U.S., the companies said on Friday.
The deal is likely to draw intense scrutiny from federal regulators and critics as it would form a new supermarket colossus at a time of soaring food costs. Grocery prices jumped 13% in September compared to a year ago.
Kroger is the largest supermarket operator in the U.S., with 420,000 employees and more than 2,700 stores, including Ralphs, Harris Teeter, Fred Meyer, and King Soopers. Albertsons is the country's second-largest supermarket company, with 290,000 employees and almost 2,300 stores, including Safeway and Vons.
The two overlap in several markets, largely in the western part of the country. Their tie-up would involve spinning off up to 375 stores into a separate company, the companies said.
In the Friday announcement, Kroger said it would "reinvest approximately half a billion dollars of cost savings from synergies to reduce prices for customers" and invest $1 billion to raise wages and benefits for workers.
For both companies, Walmart is a key competitor, as a nationwide big-box giant that sells more groceries than Kroger and Albertsons combined. The two also face competitions from Costco as well as Amazon, with its online delivery reach, and lately, dollar stores, the fastest-growing segment of U.S. retail.
Antitrust regulators in the Biden administration have advocated for changes in the government's approach to mergers, and they have pushed back against megadeals, citing outsize impact on competition and consumer prices.
Kroger and Albertsons are "going to get a much closer look than earlier transactions received in this sector," said William Kovacic, former lawyer and chair at the Federal Trade Commission. "They're going to face a great deal more skepticism about the potential benefits of the consolidation,"
But the federal competition regulators have also recently lost in litigation over some attempts to block mergers, said Kovacic, who's now a law professor at George Washington University.
"So there's likely to be a difficult passage through the review by the FTC," he said." It does not mean that the FTC is absolutely destined to prevail if it decides to go to court and challenge the deal."
For many years, Kroger, Albertsons and Safeway were the leading standalone grocery chains, prominent in different parts of the country. Albertsons merged with Safeway in 2015, then unsuccessfully tried to merge with pharmacy chain Rite Aid in 2018 and eventually went public in 2020.
FAQs
Kroger and Albertsons agreed to merge in October 2022. The companies said a merger would help them better compete with big retailers like Walmart, Costco and Amazon, which owns Whole Foods, because they would have more power to negotiate prices and could save on distribution and administrative costs.
Which 2 groceries stores will merge to create the biggest groceries retailer in America? ›
The Kroger-Albertsons merger will help their stores compete better while benefiting their customers, workers and communities. A Kroger spokeswoman said blocking the merger will harm consumers and workers.
Why does Kroger want to merge with Albertsons? ›
But Kroger and Albertsons said the merger would benefit workers by allowing them to better compete against non-union giants such as Walmart, Amazon, Aldi and other chains. Kroger and Albertsons had committed not to close stores as a result of the merger.
Which two supermarkets plan to merge in 2024? ›
Kroger, Albertsons to sell 166 more stores seeking approval of $25 billion merger. April 22 (Reuters) - Kroger (KR.
What grocery chain did Kroger buy out? ›
FTC Challenges Kroger's Acquisition of Albertsons | Federal Trade Commission.
Who is the largest supermarket chain in the US? ›
Walmart is the largest supermarket chain in the United States, and indeed the world, with a *global turnover of $611.3 billion (€556.45 billion) in 2022.
Should Krogers merger with Albertsons be blocked? ›
Kroger and Albertsons have rejected the FTC's claims, arguing that blocking the merger would actually raise grocery prices, harm employees and empower other retail titans and grocery giants such as Walmart, Amazon and Costco.
What is the most profitable grocery chain? ›
The United States of America-based Walmart Inc is the leading supermarket and hypermarket in the world (by food service sales). The company reported revenues of $611,289 million for the fiscal year ended January 2023 (FY2023), an increase of 6.72% over FY2022.
What happens to Albertsons if the merger fails? ›
Kroger's chances of prevailing over the FTC in court rely on their ability to convince the court that the merger is beneficial to consumers and workers. If the merger succeeds, Albertsons' value would see a 31.2% upside, while if the merger fails, Kroger would have to pay a $600 million breakup fee to Albertsons.
Is Kroger owned by Walmart or Walmart? ›
No, Kroger is not a subsidiary of Walmart. And Walmart doesn't have a single owner, it is “owned” by thousands of shareholders.
It had nearly double the retail sales of the next chain, Albertsons. Founded in 1883 in Cincinnati, Ohio (where it is still headquartered), by Bernard Kroger, The Kroger Co. has become the largest supermarket chain in the United States and the one of the largest overall retailers, behind the retailing giant, Walmart.
Is Kroger the second largest grocery chain? ›
The Kroger Company is the largest supermarket operator in the U.S. by revenue and the country's fifth-largest general retailer. The company is one of the largest American-owned private employers in the United States.
Who is Kroger getting ready to merge with? ›
The proposed merger with Albertsons Cos. will produce meaningful and measurable benefits for customers, associates and communities across the country. The combined company committed that no stores, distribution centers or manufacturing facilities will close as a result of the merger.
Which company is bigger, Albertsons or Kroger? ›
Kroger, the biggest U.S. supermarket operator with 2,719 locations, owns Ralphs, Harris Teeter, Fred Meyer and King Soopers. Albertsons, the second-largest chain with 2,272 stores, owns Safeway and Vons. Kroger employs about 430,000 people; Albertsons 290,000.
What is the market share of Kroger Albertsons merger? ›
According to data from Euromonitor, a London-based research and consultancy firm, the combined market share of Kroger (8.1 percent) and Albertsons (4.8 percent) added up to only 12.9 percent, approximately half the market share of Walmart (25.2 percent).
