The nation’s largest grocer wants to buy the second largest, in a deal with potentially profound implications for the food processors whose products they sell.
Kroger Co. announced Oct. 14 that it plans to acquire Albertsons Cos. in a $24.6 billion deal. They are the largest pure-play grocers in America, although Walmart sells more groceries than both of them together. Albertsons shareholders representing a majority have already approved the deal.
The transaction will undoubtedly attract attention from regulators due to its potential impact on competition in food retailing. Kroger and Albertsons already compete, especially in the West, where Albertsons has Vons, Acme, Kings Food Markets and other banners. In an announcement of the deal, Kroger proposes to spin off between 100 and 375 Albertsons stores to satisfy antitrust concerns.
If the Federal Trade Commission allows the deal to move forward, the situation has the potential to add to tensions between processors and retailers over pricing and discounting. Always present, these conflicts took on a new intensity with the onset of the current round of inflation.
"Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores,” Kroger CEO Rodney McMullen said in the announcement.
The proposed deal is the latest and largest in a trend of consolidations in food retailing. Albertsons merged with Safeway, the nation's third-largest grocer, in 2015 and went public in 2020.
