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Kroger, Albertsons To Merge In $24.6B Agreement

Last updated on October 18th, 2022 at 09:44 am

Cincinnati-based Kroger Co. and Boise, Idaho-based Albertsons Companies have announced a merger agreement between the two organizations. Through its supermarket banners, this combination will expand customer reach and improve proximity to deliver food to about 85 million households.

Under the terms of the merger agreement, which has been approved by the board of directors of each company, Kroger will acquire all of the outstanding shares of Albertsons’ common and preferred stock for an estimated total consideration of $34.10 per share, implying a total enterprise value of about $24.6 billion, including the assumption of $4.7 billion of Albertsons Cos. net debt.

As part of the transaction, Albertsons Cos. will pay a cash dividend of up to $4 billion to its shareholders. The cash component of the $34.10 per share consideration will be reduced by the per share amount of the special cash dividend, which is expected to be about $6.85 per share. This cash dividend will be payable on Nov. 7 to shareholders of record as of the close of business on Oct. 24.

Together, Albertsons Cos. and Kroger have more than 710,000 employees and operate a total of 4,996 stores, 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies and 2,015 fuel centers. The combination will create an ecosystem across 48 states and the District of Columbia, providing customers with shopping experiences across both stores and digital channels. 

Kroger plans to invest in lowering prices for customers and expects to reinvest about half a billion dollars of cost savings from synergies to reduce prices for customers. An incremental $1.3 billion will also be invested into Albertsons Cos. stores to enhance the customer experience. The combined company expects to invest $1 billion to continue raising employee wages and comprehensive benefits after close.

“We are bringing together two purpose-driven organizations to deliver superior value to customers, associates, communities and shareholders,” said Rodney McMullen, Kroger chairman and CEO, who will continue serving as chairman and CEO of the combined company.

“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 position as a more compelling alternative to larger and non-union competitors.

“As a combined entity, we will be better positioned to advance Kroger’s successful go-to-market strategy by providing an incredible seamless shopping experience, expanding Our Brands portfolio, and delivering personalized value and savings. We’ll also be able to further enhance technology and innovation, promote healthier lifestyles, extend our health care and pharmacy network and grow our alternative profit businesses. We believe this transaction will lead to faster and more profitable growth and generate greater returns for our shareholders.”

Kroger held a conference call Oct. 14 to discuss the merge. For more information, visit KrogerAlbertsons.com.

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