The grocery titan Kroger announced plans on Friday to acquire Albertsons in a deal that could reshape the grocery landscape in the United States.
The deal would unite the country’s two largest supermarket chains, which have been forced by rising inflation and competition from Walmart and Amazon to choose between cutting further into their profit or the customer’s wallet.
Kroger said it will pay $34.10 per share to acquire Albertsons, valuing the company at about $24.6 billion including debt. That is about 20 percent higher than the close of Albertsons stock on Thursday, which was already elevated on reports that a deal with Kroger was in the works.
Albertsons and Kroger, with 222 years of grocery experience between them, have been squeezed by the expansion of high-powered retailers into the industry. Their combined annual revenue of $209 billion would put them on a par with Walmart’s grocery sales, which totaled $218 billion last year.
“Through a family of well-known and trusted supermarket banners, this combination will expand customer reach and improve proximity to deliver fresh and affordable food to approximately 85 million households,” Kroger and Albertsons said in a joint statement.
But the proposed merger is likely to invite antitrust scrutiny from regulators, who have been focusing on the potential power of large companies to affect consumer prices. Kroger and Albertsons are expected to propose selling off certain stores, but Lina Khan, who leads the Federal Trade Commission, which is likely to review any deal, has expressed skepticism that such solutions are sufficient to address antitrust concerns.
Kroger, based in Cincinnati, operates 2,750 grocery stores across the United States under banners that include Ralphs, Dillons and Harris Teeter and has a market capitalization of about $32 billion. Albertsons, based in Boise, Idaho, runs 2,200 supermarkets under names like Albertsons, Safeway and Vons and has a market capitalization of roughly $15 billion.
Consumer protection groups immediately spoke out against a Kroger-Albertson merger when news reports surfaced on Thursday about the possibility. The American Economic Liberties Project, a nonprofit that promotes antitrust legislation, criticized it as a “bad deal for consumers, workers and communities.”
“There is no reason to allow two of the biggest supermarket chains in the country to merge — especially with food prices already soaring,” Sarah Miller, the group’s executive, said in a statement on Thursday.
