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Kroger, Albertsons reportedly in merger talks

Buzz of potential combination comes in wake of Albertsons’ disclosure of strategic review

Russell Redman

October 13, 2022

3 Min Read
Kroger Albertsons merger report_Oct2022.jpg
Bloomberg reported that negotiations are in progress for a potential deal that would combine the nation's two largest supermarket operators.Kroger/Albertsons

*Editor's Note: This is a developing story. Please check back for updates.

The nation’s No. 1 and No. 2 largest supermarket retailers, The Kroger Co. and Albertsons Cos., are holding discussions about a potential merger, Bloomberg reported today.

Citing unidentified sources, Bloomberg said in its initial report that a deal could be struck possibly this week. The sources told Bloomberg that no final decisions have been made and that negotiations could linger or fall through.

Spokespeople for Kroger and Albertsons couldn’t immediately be reached for comment.

In an update, Bloomberg reported later on Thursday that a cash-and-stock deal valued at $25 billion for a Kroger acquisition of Albertsons could be in the offing as soon as this evening, according to people familiar with the situation.

Albertsons, previously owned by an investment group led by private equity firm Cerberus Capital Management, went public in June 2020 following an initial public offering. Cerberus still holds an approximately 29% stake in the grocer retailer.

The report of merger talks comes more than seven months after Albertsons announced that its board of directors had initiated a “review of potential strategic alternatives.” The Boise, Idaho-based food and drug retailer said at the time that it retained Goldman Sachs and Credit Suisse as financial advisers for the review, which would assess balance sheet optimization and capital return strategies, potential strategic or financial transactions, and development of other strategic initiatives to complement Albertsons’ existing businesses. Albertsons also said the review would involve “responding to inquiries.”

Related:Analysis: Would Kroger-Albertsons merger pass muster with regulators?

Then in April, when reporting fiscal 2021 results, Albertsons Cos. President and Chief Financial Officer Sharon McCollam shed more light on the planned strategic review, telling analysts that the company thinks it’s undervalued versus competitors.

“It was really sparked by the fact that valuation compared to peers was not reflecting the strength of our performance, and there were reasons in our mind for some of that,” McCollam said in the analyst Q&A portion of the earnings call. “We outperformed Kroger in Q4, we outperformed them for the year, etc. So that was really, originally, the catalyst for us,” she explained. “And of course, there was the overhang of the preferred shares that had hit the market, and then the IPO lock-up that was coming.”

At the time, analysts speculated that Albertsons could make a range of moves following the review.

Related:Albertsons announces strategic review of company

“This strategic review will be a comprehensive assessment of the business to tackle all of these issues. It’s still unclear what will ultimately unfold from this review, but our guess is that we’ll see multiple actions to maximize shareholder value,” CFRA Research analyst Arun Sundaram told Supermarket News in an email at the time. “For example, we could see Albertsons divest some underperforming banners and use that cash to buy back stock and accelerate investments in areas like supply chain, technology and e-commerce. But again, I’ll emphasize that there are still a lot of unknowns right now.”

Currently, Albertsons Cos. operates 2,273 retail food and drug stores in 34 states and the District of Columbia under such banners as Albertsons, Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, Carrs, Kings Food Markets and Balducci’s Food Lovers Market. The retailer’s operations also include 1,720 pharmacies, 402 fuel centers, 22 distribution centers and 19 manufacturing facilities. The company totaled fiscal 2021 sales of $71.89 billion.

As of Thursday mid-morning trading, Kroger shares were down about 1% to $45.58, with a daily range of $45.03 to $48.38 and a 52-week range of $38.22 to $62.78. Shares of Albertsons were up over 6% to $27.30, with a daily range of $25.33 to $28.48 and a 52-week range of $24.34 to $37.99.

Cincinnati-based Kroger generated fiscal 2021 sales of $137.89 billion. The company operates 2,723 supermarkets and multi-department stores under more than 20 banners, including Kroger, Ralphs, Dillons, Smith’s, King Soopers, Fry’s, QFC, City Market, Owen’s, Jay C, Pay Less, Baker’s, Gerbes, Harris Teeter, Pick N’ Save, Metro Market, Mariano’s, Fred Meyer, Food 4 Less and Foods Co. More than 2,250 stores have pharmacies, and over 1,600 have fuel centers. 

MORE KROGER-ALBERTSONS NEWS:

Analysis: Would Kroger-Albertsons merger pass muster with regulators?

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

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