Kroger Co snapped up Albertsons Cos Inc in a $25 billion deal on Friday, creating a U.S. grocery behemoth to better compete with leader Walmart Inc on prices while bracing for potential antitrust roadblocks.
The mega merger between the No. 1 and 2 standalone grocers in the United States will bring under one roof nearly 5,000 stores that include banners such as Albertsons' Safeway and Kroger-owned Ralphs and Fred Meyer.
To help ease those concerns, the companies said they plan to divest some stores and that Albertsons is ready to spin off a standalone unit to its shareholders immediately before the deal's close, expected in early 2024. The new public company is estimated to comprise as many as 375 stores. Barlow said the U.S. FTC would still have questions about who would run the stores, and whether they would have enough in the way of assets and purchasing power to compete effectively.Neil Saunders, managing director of GlobalData Retail, said "these are mostly local issues where a merger produces a very high market share in certain areas. From a broader national perspective, a combined Kroger and Albertsons does not pose any major threat to the competitive dynamics of the market.
Market leader Walmart has been doubling down on its own grocery business and has traditionally used its scale to demand the lowest possible prices from food and beverage suppliers, leaving rivals at a disadvantage in price negotiations.
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