US: Kroger announces $25 billion merger with rival Albertsons, threatens competition

On Friday, US grocer Kroger Co indicated that it will buy its rival Albertsons Companies Inc in a $24.6 billion deal, said reports. The former will buy the shares of the latter with one share valued at $34.10. This merger is reportedly seen as a threat to other large-scale grocers like the industry leader Walmart.

The media reports first emerged yesterday, citing several sources which sent Albertsons’ share price surging to $28.63 after the deal seemed imminent. Kroger bought the shares at least a 30% premium above the supermarket chain’s average share price over the past month, said the media report.

Kroger is the second largest grocer in the US just behind Walmart and Albertsons stands fourth behind Costo. This merger is set to bring more than 2,200 Albertsons locations and more than 2,700 Kroger stores together.

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However, this decision has also come under regulatory scrutiny with some analysts saying it could stifle competition and lead to higher prices for shoppers, reported Reuters. “Albertsons Cos brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores,” said Kroger's CEO Rodney McMullen easing some of the concerns.

While the board members of both companies have unanimously approved the agreement it will also require regulatory approval, indicated media reports. This comes amid soaring prices at grocery stores across the US.

(With inputs from agencies)

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