America's Two Largest Grocery Chains Just Announced a Merger
Two major supermarket chains are planning on becoming one mega-market in a merger that—if all goes well—is expected to be completed in early 2024.
America's largest grocery chain Kroger is acquiring second-largest rival company Albertsons for a whopping $24.6 billion. The two combined operate about 5,000 stores plus pharmacies and gas stations nationwide, and have made a combined annual revenue of $209 billion last year. The new totals would threaten Walmart, whose grocery sales hit $218 billion, according to The New York Times.
"We are bringing together two purpose-driven organizations to deliver superior value to customers, associates, communities and shareholders," Kroger CEO and Chairman Rodney McMullen says in a statement. "Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores. This merger advances our commitment to build a more equitable and sustainable food system by expanding our footprint into new geographies to serve more of America with fresh and affordable food, and accelerates our positions as a more compelling alternative to larger and non-union competitors."
However, the deal is likely to draw major scrutiny from federal regulators, as it would create a grocery chain monopoly and allow the company to affect prices in a time of soaring food costs. The deal is still subject to the federal antitrust review which could block it from moving forward.
"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," Bloomberg Intelligence Analyst Jennifer Bartashus told Bloomberg News.
Kroger and Albertsons say they'll sell some of their stores to their competitors—and may move between 100 to 375 of their stores into a new stand-alone company to lessen the effects of a monopoly.
Kroger Co. currently has about 2,800 stores in 35 states under banners like Kroger, Ralphs, Dillons, King Soopers, QFC, and Harris Teeter. Albertsons has some 2,200 locations under brands like Albertsons, Vons, and Safeway.