Kroger, a stand alone grocery giant in the US, is considering a merger with another large grocery company Albertsons, according to people familiar with the matter. This proposed merger could become one of the largest companies in the retail space with a $47 billion market value. Albertsons stocks rose by 7 percent while Kroger’s stock saw a marginal fall, after the release of the report.
Bloomberg reported that merger talks were on and could even be finalized in a week. If the merger is accepted after antitrust review, the combined retail company could offer immense competition to Walmart, which is the leading retailer in the nation.
Retailers are facing lower margins due to soaring costs as well as supply chain issues, after a boom in sales and profits, due to the pandemic. Albertsons is smaller when compared to Kroger. The combined company would have about 5,000 stores across the nation.
Albertsons is a Boise, Idaho based grocer and has the following supermarket banners:
Safeway
Jewel-Osco
Acme
Tom Thumb.
Kroger is based in Cincinnati and operates in its own name and also has the following supermarket chains:
Fred Meyer
Harris Teeter
King Soopers
Ralph and
Smith’s.
Kroger’s revenue in 2021 was $137 billion while Albertsons reported sales of $69 billion. A merger would prove beneficial to both the companies. They would be able to negotiate better deals with suppliers as a result of their combined leverage, as their buying power would increase.
The companies would also say that their merger would result in lower costs of consumers as anti-monopoly nonprofits will argue that American consumers will face less choices as well as less competitive prices when the mega merger takes place.
Soaring raw material prices as well as smaller margins are affecting the retail industry. High inflation, the continuation of supply chain issues and rising prices have affected the retail industry as they have to cut profit margins. A merger would benefit both Kroger and Albertsons but will it benefit the consumer is an issue that is debatable.
Neither Kroger nor Albertsons has commented on the merger.
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