By Jordan Valinsky, CNN Business
(CNN) — Kroger announced it’s merging with Albertsons in a $24.6 billion deal, creating one of the largest grocery store chains in the United States with nearly 5,000 stores when combined.
“The combination creates a premier seamless ecosystem across 48 states and the District of Columbia, providing customers with a best-in-class shopping experience across both stores and digital channels,” Kroger said in a press release.
The merged company will give it greater scale to compete against Amazon, Costco, Walmart and smaller grocery store rivals. Traditional grocery store chains are losing market share to lower-priced companies, such as Aldi, Trader Joe’s, Grocery Outlet because of stubbornly high inflation and rising costs.
Prices at grocery stores continued to soar last month, adding even more pressure to shoppers’ wallets. The food at home index, a proxy for grocery store prices, increased 0.7% in September from the month prior and a stunning 13% over the last year, according to new government data released Thursday.
Kroger said it would buy Albertsons for $34.10 a share — a roughly 30% premium above the grocery chain’s average share price over the course of the past month. Shares of Kroger slid 2% in premarket trading, while Albertsons soared more than 11%.
First approved by both of the company’s board of directors, the merger still needs regulatory approval. To help ease that process, the company will not include upwards of 375 stores in the deal, and it will spin them off into a new company to “create a new, agile competitor,” the chains said in a statement.
In a statement, Kroger CEO Rodney McMullen noted that Albertsons “brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores.” He will become the newly merged company’s CEO.
The merger is expected to close in early 2024.
The-CNN-Wire
™ & © 2022 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
