Kroger and Albertsons, which is based in Boise, Idaho, said Friday that they expected to close the deal in early 2024, and that Kroger would pay Albertsons $600 million if the merger fell apart . An infographic to depict the Kroger acquisition of Albertson's. Kroger-Albertsons mega-merger could cause more US food deserts, experts But as the potential buyer was going through due diligence and shortly after Albertsons financial advisers raised the idea of a multi-billion-dollar dividend payout to shareholders, the buyer walked away. IGA (supermarkets) - Wikipedia Another huge grocery retailer could put more pressure on smaller players and change the balance of power in working with suppliers. As part of the $9 billion deal, Albertsons sold the stores to a smaller grocery chain, Haggen, which previously had less than 20 stores. We believe this transaction will lead to faster and more profitable growth and generate greater returns for our shareholders. Establishes National Footprint to Serve America with Fresh, Affordable Food for Everyone, Combines Two Companies with Shared Values to Unite Around Kroger's Purpose to Feed the Human Spirit, Accelerates Kroger's Go-to-Market Strategy and Positions Combined Company as a Premier Omnichannel Food Retailer, Albertsons Companies will prepare an information statement on Schedule 14C for its stockholders with respect to the approval of the transaction referenced herein. 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. ", The newly merged company said it "expects to invest $1 billion to continue raising associate wages and comprehensive benefits after close.". Krogers partnership with the Ocado Group has already led to about 20 automated customer fulfillment centers and other facilities, while Albertsons has focused on Instacart, DoorDash, and Uber Eats, according to Supermarket News. When completed, the information statement will be mailed to Albertsons Companies' stockholders. Kroger and Albertsons to Combine Kroger has a track record of successful integrations that combine the strengths of each company while maintaining and enhancing each organizations' distinctive banners and storied histories. As of June 18, 2022, Albertsons Companies operated 2,273 retail food and drug stores with 1,720 pharmacies, 402 associated fuel centers, 22 dedicated distribution centers and 19 manufacturing facilities. The establishment of SpinCo, which is estimated to comprise between 100 and 375 stores, would create a new, agile competitor with quality stores, experienced management, operational flexibility, a strong balance sheet, and focused allocation of capital and resources to provide customers with continued value and quality service and associates with ongoing compelling career opportunities. Albertsons shareholders expect to receive $34.10 per share. The per share cash purchase price payable to Albertsons Cos. shareholders in the merger would be reduced by an amount equal to (i) three times four-wall adjusted EBITDA for the stores contributed to SpinCo divided by the number of Albertsons Cos. common shares (including common shares issuable upon conversion of Albertsons Cos.' preferred stock) outstanding as of the record date for the spin-off plus (ii) the per share amount of a special pre-closing cash dividend of up to $4 billion payable to Albertsons Cos. shareholders, which is expected to be approximately $6.85 per share. In early 2022, a grocery store chain identified as Party A in securities filings emerged with an offer to buy Albertsons for $41 a share. An on-demand replay of the webcast will be available at approximately 1:00 p.m. The S in superstore could stand for synergy as well as savings for the new company. Additional Information About Albertsons Companies and Where to Find It. Anyone can read what you share. Research. News > . Washington Analysis, a research firm in Washington, D.C., that focuses on political and regulatory policy, put the odds of the merger successfully closing at 35 percent. Opinions expressed by Forbes Contributors are their own. Neither Kroger nor Albertsons Companies assumes the obligation to update the information contained herein unless required by applicable law. According to Numerator.com, Albertsons has been growing e-commerce sales rapidly with more households shopping online and using its successful click & collect strategy.. We may see mega-mergers create superpowers in the supermarket sector. In a statement, Kroger Chairman and CEO Rodney McMullen said, "Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores. This press release contains certain statements that constitute "forward-looking statements" within the meaning of federal securities laws, including statements regarding the effects of the proposed transaction. are planning a merger that would create a superstore second in scale only to Walmart Ever since the pending megamerger between Kroger and Albertsons, the two largest grocery store chains in the country, was announced in October, the companies have argued that the marriage will be good for consumers, employees and communities. Kroger and Albertsons merger: What lies ahead? Citi and Wells Fargo Securities, LLC are serving as financial advisors and Weil, Gotshal & Manges LLP and Arnold & Porter Kaye Scholer LLP are serving as legal counsel to Kroger. As a combined company, we will build on our similar values to create a culture that embraces diversity, equity and inclusion and fosters a best-in-class associate experience by enabling, supporting and empowering our associates to unlock their full potential. The purchase price represents a premium of approximately 32.8% to the unaffected closing price of Albertsons Cos. common stock on October 12, 2022, and 29.7% to the 30-day volume-weighted average price. Its only natural for them to want to seek an exit., Kroger-Albertsons Merger Faces Long Road Before Approval, https://www.nytimes.com/2023/01/23/business/kroger-albertsons-merger.html. Together, Albertsons Cos. and Kroger currently employ more than 710,000 associates and operate a total of 4,996 stores, 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies and 2,015 fuel centers. The merger of Kroger and Albertsons would put control of the grocery industry into the hands of [+] three companies, which together would represent more than half of the sector by revenue. In 2013, the investors put up $100 million in cash and took out $3.2 billion of debt to acquire more than 800 stores from Supervalu. Albertsons announced it would pay shareholders about $4bn in special dividends as part of the merger agreement, which would see Kroger spending $24.6bn to acquire Albertsons, with. Thats where the most uncertainty lies how many stores will they have to divest? said Arun Sundaram, an equity analyst at CFRA Research. No further action by Albertsons Cos.' shareholders will be needed or solicited in connection with the merger. IGA, Inc., is an American chain of grocery stores that operates in more than 41 countries. "This transaction with Kroger provides substantial value to shareholders and exciting opportunities for associates to be part of a combined organization with the ability to better support the lives and health of millions of Americans. 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. Please refer to the reports and filings of Kroger and Albertsons Companies with the Securities and Exchange Commission for a further discussion of the risks and uncertainties that affect them and their respective businesses. Consistent with prior transactions, Kroger plans to invest in lowering prices for customers and expects to reinvest approximately half a billion dollars of cost savings from synergies to reduce prices for customers. This cash dividend is expected to be payable on November 7, 2022, to shareholders of record as of the close of business on October 24, 2022. Coresights report on regional consolidation of grocery chains showed that from 2015 to 2020 M&A grew national giants market share as they gobbled up midsize regional competitors and otherwise expanded. Kroger and Albertsons plan merger to combine 2 largest supermarket Phil Weiser begins listening tour on possible Kroger-Albertsons merger CFA Kroger will also build on its recent investments in associate wages, training and benefits. Michael Needler Jr., who runs Fresh Encounter, a chain of 98 grocery stores, referred to the water-bed effect of giants like Albertsons and Kroger. Kroger will also build on its recent investments in associate wages, training and benefits. They have already made big profits in their long-term investment in Albertsons and hope to make billions of dollars more through the merger. In October, Kroger announced it would acquireAlbertsons in a complex deal that would pay all shareholders $34.10 a share. The ability of Kroger and Albertsons Companies to achieve the goals for the proposed transaction may also be affected by their ability to manage the factors identified above. As grocery chains struggled to compete against the big-box behemoths, consolidation happened and private-equity firms moved in, sometimes with disastrous results. To learn more about us, visit our newsroom and investor relations site. The companies said they plan to continue with their shared track record to lower prices, enhance customer experience and increase associate wages and benefits. EBITDA Reconciliations1. Reuters reported last month that the Federal Trade Commission had asked Kroger to supply more information about the proposed merger. The deal,. To learn more about us, visit our newsroom and investor relations site. The conference call will broadcast online at ir.kroger.com. Kroger-Albertsons merger: Two of the largest supermarkets in America But for Albertsons, the pandemic significantly changed its fortunes. The Kroger-Albertsons mega-merger would create a company with about 5,000 U.S. stores, a close second to Walmart's 5,335 in the United States. Kroger has invested an incremental $1.2 billion in associate compensation and benefits since 2018. Union officials have attacked the deal, saying it puts jobs at risk as antitrust regulators will probably force the sale of hundreds of grocery stores across the country. Kroger and Albertsons each already control multiple retail brands, creating the illusion of a large number of independent players. "An incremental $1.3 billion will also be invested into Albertsons Cos. stores to enhance the customer experience. 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 approximately $6.85 per share. In any case, the chains' combined grocery market share would fall short of that of Walmart, which has stores within 10 . Albertsons went public in the early months of the pandemic, but its offering was lackluster. In Colorado, Kroger operates 148. Kroger and Albertsons Cos. will provide additional detail regarding SpinCo prior to closing. As part of the transaction, Albertsons Cos. will pay a special cash dividend of up to $4 billion to its shareholders. Appendix: "At a time when people are increasingly shopping for groceries and eating at home, Kroger and Albertsons Cos. will be better positioned to relieve the inflationary pressures facing shoppers with a combined portfolio of approximately 34,000 total private label products across premium, natural and organic, and opening price point brands," the news release stated. Albertsons Cos. shareholders holding more than a majority of Albertsons Cos.' common stock have either delivered a written consent or committed to delivering a written consent approving the transaction no later than October 18, 2022 and Albertsons Cos. shareholders holding more than a majority of Albertsons Cos.' preferred stock have already approved the transaction. Combined, the stores employ more than 700,000 people across 5,000 stores. 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. Also includes expenses related to management fees paid in prior fiscal years in connection with acquisition and financing activities.5Represents incremental pay that is legislatively required in certain municipalities in which Albertsons operates.6Related to the Combined Plan during the fourth quarter of fiscal 2021.7Miscellaneous adjustments include non-cash lease-related adjustments, lease and lease-related costs for surplus and closed stores, net realized and unrealized gain on non-operating investments, certain legal and regulatory accruals and settlements, net and other (primarily includes adjustments for pension settlement gain, unconsolidated equity investments and certain contract terminations). The deal would go beyond food to include healthcare. That could occur in California, Texas, Washington, D.C. and/or Phoenix, among others. According to the Coresight. KR Albertsons Companies operates stores across 34 states and the District of Columbia with 24 banners including Albertsons Safeway, Vons, Jewel-Osco, Shaw's, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, Carrs, Kings Food Markets and Balducci's Food Lovers Market. An incremental $1.3 billion will also be invested into Albertsons Cos. stores to enhance the customer experience. Together with Kroger, our combined iconic banners will be able to provide customers with even more value and greater access to fresh food and essential pharmacy services. We are committed to creating #ZeroHungerZeroWaste communities by 2025. Last fall, Kroger announced it agreed to purchase Albertsons in a $24.6 billion supermarket merger a move that would have nationwide impacts on consumers. These statements are based on the assumptions and beliefs of Kroger and Albertsons Companies management in light of the information currently available to them. Kroger, the second largest grocery store chain, purchased the fourth largest, Albertsons, for an estimated total enterprise value of $24.6 billion, the company announced in a news release Friday. Importantly, the merger secures union jobs and we will continue to work with local unions across America to serve our communities. 'We're really worried': US supermarket mega-merger raises mass layoff How Kroger-Albertsons deal came together over six months - Cincinnati But that value will decrease by $6.85 a share when the $4 billion dividend to all shareholders is paid and could decline further if, in order to receive regulatory approval, hundreds of stores are placed in a new company that would be owned by Albertsons shareholders, including the private-equity firms. Crain's reporter Ally Marotti and host Amy Guth discuss why Chicago's packaged-foods giants should be concerned about the proposed Kroger-Albertsons merger, and they talk about the challenges and . "Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores. The transaction is expected to close in early 2024, subject to the receipt of required regulatory clearance and other customary closing conditions, including receipt of clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Kroger-Albertsons merger: Looking at the numbers But the industrys future will depend, as always, on price, selection, convenience, location, service, and of course, customer loyalty. This cash dividend will be payable on November 7, 2022, to shareholders of record as of the close of business on October 24, 2022. See the Appendix for a reconciliation of historical non-GAAP measures. Kroger and Albertsons executives defend proposed merger at hearing Associated presentation materials and an infographic regarding the transaction will be available on the investor relations section of each company's website as well as a joint transaction website www.KrogerAlbertsons.com. Kroger-Albertsons merger: What it could mean for grocery prices | CNN ET on October 14, 2022. "Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores. An on-demand replay of the webcast will be available at approximately 1:00 p.m. Kroger and Albertsons Cos. have agreed to work together to determine which stores would comprise SpinCo, as well as the pro forma capitalization of SpinCo. Supporting and investing in our associates is foundational to both of our organizations and will continue to be a critical pillar of our success. The forward-looking statements by Kroger and Albertsons Companies included in this press release speak only as of the date the statements were made. For the past 15 of her 20 years working at the grocery store, Ms. Barry said, she had perfect attendance before a bout of Covid-19 just before Thanksgiving forced her to call out sick. Kroger and Albertsons Companies Announce Definitive Merger Agreement Kroger announced Friday that it plans to buy Albertsons in a nearly $25 billion deal that could change the US retail industry and impact how millions of customers buy their groceries. Publix caps year of new territory with sound Q4 results . The purchase price represents a premium of approximately 32.8% to the unaffected closing price of Albertsons Cos. common stock on October 12, 2022, and 29.7% to the 30-day volume-weighted average price. Kroger (KR) and Albertsons, which both employ mostly union workforces, want to merge to be more competitive against non-union giants such as Walmart (WMT), Amazon (AMZN), and Costco (COST). Albertsons Companies will prepare an information statement on Schedule 14C for its stockholders with respect to the approval of the transaction referenced herein. ET. The deal, if approved by the Federal Trade Commission, would create a. Both Kroger and Albertsons Cos. are anchored by shared values focused on ensuring associates, customers and communities thrive. It could mean thinner margins for smaller, independent stores and some suppliers; more competition for larger players, and a possible boom for consolidation in the future. Such statements are indicated by words or phrases such as "accelerate," "create," "committed," "confident," "continue," "deliver," "driving," "expect," "future," "guidance," "positioned," "strategy," "target," "synergies," "trends," and "will." Please refer to the reports and filings of Kroger and Albertsons Companies with the Securities and Exchange Commission for a further discussion of the risks and uncertainties that affect them and their respective businesses. The combined company expects to invest $1 billion to continue raising associate wages and comprehensive benefits after close. We are, across our family of companies, nearly half a million associates who serve over 11 million customers daily through a seamless shopping experience under a variety of banner names. If a merger does . The two grocery store chains and investment firms involved insist the deal isnt about a payday for investors. The Kroger and Albertsons Merger Must Be Stopped The CEOs for Kroger and Albertsons appeared before the U.S. Senate back in November to answer questions about the proposed merger, per NPR. Given the similarities in the culture and values at Kroger and Albertsons Cos., I am confident that the combination will also have a positive impact on our associates and the communities we are proud to serve. So what still has to happen for the merger to be completed, as planned, in 2024? WMT Kroger As part of the transaction, Albertsons Cos. will pay a special cash dividend of up to $4 billion to its shareholders. How the Kroger-Albertsons merger could transform 5 key grocery markets A customer shops inside an Albertsons Cos. grocery store in San Diego, June 22, 2020. That is especially true of supermarket giant Kroger 's proposed purchase of rival Albertsons. Delivering Quality, Value, Convenience and Choice for Customers, Continuing Track Record of Investments Across Lowering Prices, Enhancing the Customer Experience, and Increasing Associate Wages and Benefits, Strengthens Kroger's Value Creation Model to Drive Profitability and Enhance Shareholder Returns, Albertsons Companies Shareholders Expected to Receive Total Consideration Valued at $34.10 Per Share, Kroger to Host Conference Call at The proposed merger has drawn opposition from consumer advocates and union officials. ", Additionally, Kroger said it expects this deal will enable the company to "serve America with fresher food, faster" with its "expanded network of stores and distribution centers, as well as a broader supplier base. Weiser's office is now leading . Under the terms of the merger agreement, which has been unanimously approved by the board of directors of each company, Kroger will acquire all of the outstanding shares of Albertsons Companies, Inc. ("Albertsons Cos.") common and preferred stock (on an as converted basis) for an estimated total consideration of $34.10 per share, implying a total enterprise value of approximately $24.6 billion, including the assumption of approximately $4.7 billion of Albertsons Cos. net debt. Kroger and Albertsons Plan $25 Billion Supermarket Merger That May Face Still, the investors sold $800 million worth of shares, andanother $1.7 billion was raised from some hedge funds and used to do a share buyback. Kroger will host a conference call to discuss the transaction tomorrow, October 14, 2022 at 8:30 a.m. In addition to company stores, Albertsons operates Safeway, Vons, Jewel-Osco, Shaws, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, Carrs, Kings Food Markets and Balduccis Food Lovers Market. There could be another bright side for smaller players facing big competitors. Here's a look at the number of stores Kroger and Albertsons each operate in those markets as of July 2022. 24/7 coverage of breaking news and live events. He has advised domestic and foreign clients in the tax-efficient structuring of legal entities, effective tax rate planning, mergers and acquisitions, corporate reorganizations, treasury. Kroger and Albertsons Cos. have agreed to work together to determine which stores would comprise SpinCo, as well as the pro forma capitalization of SpinCo. Kroger has already paused its share repurchase program to prioritize de-leveraging following the merger to achieve its net leverage target of 2.5x EBITDA in the first 18 24 months post close. The Kroger-Albertsons Merger Spotlights a Popular Private Equity Tactic ACI That means the top three grocers would control more than half of the sector. Kroger will host a conference call to discuss the transaction tomorrow, October 14, 2022 at 8:30 a.m. Albertsons profits nearly quadrupled to $1.6 billion in 2021 from $466 million in 2019. At closing, the Company plans to fund the transaction using a combination of cash on hand and proceeds from new debt financing. Kroger and Albertsons Zero in on Store Divestitures Amid Deal Review About a year later, more stores were added when the group contributed $1.25 billion to acquire more than 1,300 stores from Safeway. You may obtain copies of all documents filed by Albertsons Companies with the SEC regarding this transaction, free of charge, at the SEC's website, www.sec.gov or from Albertsons Companies's website www.albertsonscompanies.com/investors. Importantly, the merger secures union jobs and we will continue to work with local unions across America to serve our communities. You may opt-out by. CINCINNATI and BOISE,Idaho, Oct. 14, 2022 /PRNewswire/ -- Kroger (NYSE: KR) and Albertsons Companies, Inc. (NYSE: ACI) today announced that they have entered into a definitive agreement under which the companies will merge two complementary organizations with iconic brands and deep roots in their local communities to establish a national footprint and unite around Kroger's Purpose to Feed the Human Spirit. While Kroger-Albertsons would be a big deal, it would be very different from either Amazon The Kroger-Albertsons mega-merger would create a company with about 5,000 U.S. stores, a close second to Walmarts 5,335 in the United States.