Look out Walmart: In a $24.6 billion deal, grocery store giant Kroger will take over rival Albertsons, creating a supermarket giant.
The combined sales would be nearly $210 billion − about $10 billion shy of U.S. food sales of the world’s largest grocer Walmart. The combined new company is expected to divest 100 to 375 stores to mollify anti-trust concerns of regulators. That will leave Cincinnati-based Kroger with more than 4,500 stores and operations in more than a dozen new states. Divested stores will be spun out into a separate company that will be owned by current Albertsons investors.
Kroger and Albertsons announced that they entered into an agreement Friday morning. Together, both stores currently employ more than 710,000 associates and operate 4,996 stores, 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies and 2,015 fuel centers in 48 states and Washington D.C. Under the merger, Rodney McMullen, chairman and CEO of Kroger will continue in his role for the combined company.
“We are bringing together two purpose-driven organizations to deliver superior value to customers, associates, communities and shareholders,” McMullen said in a release. Shares of Albertsons jumped more than 11% after reports of the merger Thursday , while Kroger’s stock dropped about 2%. The merger would make a combined chain with a market valuation of about $47 billion and would be one of the biggest in recent years in retail, Reuters reported . The news of the potential deal arrives as grocers are struggling with runaway inflation and supply chain disruptions after the pandemic.