supermarket giant Kroger to buy Albertsons for nearly $25 billion

The American supermarket giant Kroger has reached an agreement to buy its competitor Albertsons for 24.6 billion dollars, the two companies announced on Friday in a joint press release.

This acquisition, which is subject to the approval of the competition regulatory authorities, should allow the newly formed group to compete with Walmart, number one in the sector in the United States.

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However, it could come up against the blocking of the Biden administration, which is particularly strict in terms of anti-competitive practices.

The transaction provides for Kroger to buy back shares of Albertsons at a unit price of $34.10, nearly 33% more than Wednesday’s closing price. Albertsons shares jumped more than 11% on Thursday after rumors of the acquisition.

Kroger will also assume approximately $4.7 billion of debt in Albertsons’ accounts.

Both companies expect the transaction to be completed by early 2024

For its part, Albertsons has pledged to pay its shareholders a cash dividend of up to $4 billion.

We believe this transaction will lead to faster, more profitable growth and generate better returns for our shareholders.Kroger CEO Rodney McMullen said in a statement.

With a network of nearly 2,800 stores in 35 US states, Kroger achieved a turnover of approximately 138 billion dollars last year.

Albertsons, which has 2,273 stores in 34 states and Washington, totaled sales of just under $70 billion in 2021.

These amounts remain significantly lower than the 559.2 billion turnover achieved by Walmart last year.

With the acquisition of Albertsons, Kroger consolidates its position as the second largest food retailer in the United States behind Walmart and will control approximately 11.8% of the food and grocery market.notes Neil Saunders of GlobalData.

However, it will still fall far short of the top spot, which Walmart holds with a 17.1% share.“, adds the analyst.

On Wall Street, Kroger’s stock fell 3.11% in electronic trading before the opening. That of Albertsons lost 2.03%.

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