Kroger announced plans Friday to buy competitor Albertsons for $24.6 billion, creating a supermarket behemoth.
In a press release today, Cincinnati, Ohio-based Kroger and Boise, Idaho-based Albertsons Companies announced that they have entered into a definitive agreement under which the companies will merge.
The mega-merger between the No. 1 and 2 standalone grocers in the United States will bring together over 2,200 Albertsons locations and more than 2,700 Kroger stores, including banners such as Ralphs and Fred Meyer.
The combined mega-supermarket could pose a threat to e-commerce giants Walmart and Amazon, which already have a powerful impact on the grocery market., according to the Virginian-Pilot
In the $24.6 billion deal, Kroger will pay Albertsons $34.10 for each Albertsons share, representing a premium of about 33 percent to the stock’s closing price on Wednesday, a day before media reports emerged of a deal between the two.
However, according to Reuters, some critics noted that a supermarket merger would lessen competition among U.S. grocery chains and potentially lead to higher prices for American shoppers.
A merger would create a combined company with a market valuation of about $47 billion, representing one of the biggest mergers in recent years in the retail space. The merger would also give the two companies about 13 percent of the U.S. grocery market.
Kroger operates nearly 2,800 stores in 35 states, including brands like Ralphs, Smith’s, and Harris Teeter. Albertsons operates 2,220 stores in 34 states, including brands like Safeway, Jewel Osco, and Shaw’s. Together, the two companies employ nearly 710,000 people.
The combined company would have a presence in 48 states and Washington D.C. The company did not clarify whether the new entity would have brick-and-mortar stores in all those locations or whether this would include online sales.
“We are bringing together two purpose-driven organizations to deliver superior value to customers, associates, communities, and shareholders,” said Rodney McMullen, Kroger Chairman and Chief Executive Officer, who will continue serving as Chairman and CEO of the combined company.
“We have been on a transformational journey to evolve Albertsons Cos. into a modern and efficient omnichannel food and drug retailer focused on building deep and lasting relationships with our customers and communities. I am proud of what our 290,000 associates have accomplished, delivering top-tier performance while furthering our purpose to bring people together around the joys of food and to inspire well-being. Today’s announcement is a testament to their success,” said Vivek Sankaran, CEO of Albertsons Cos.
The two companies expect to close the deal sometime early next year, according to the Washington Post.
