In one of the largest proposed retail mergers in U.S. history, Kroger has announced it plans to buy Albertsons for $24.6 billion. This merger could have profound implication across the grocery industry and the 85 million households they reach.
Both companies are significant parts of the store brands industry. Kroger houses over 14,000 private label items, including Big K and Simple Truth, while Albertsons private brands include Signature Select, O Organics, Open Nature and Primo Taglio. These brands represent billions in store brand sales.
The deal, which is expected to close in 2024, would create the third largest retail chain in America by sales. According to Morgan Stanley, its combined market share in the $1.4 trillion grocery industry would be 13.5%, making it the second largest grocer behind Walmart’s 15.5% share. Estimates are the new company could reach $210 billion in sales.
As of now, Kroger has 2,726 stores across 35 U.S. states and the District of Columbia, while Albertsons has 2,276 stores across 34 states and the District of Columbia. Kroger reported $137 billion in annual sales in 2021 and Albertsons reported $71 billion in sales for 2021.
The companies said they will spin off nearly 400 stores to form a new rival to gain antitrust clearance. Some analysts have speculated if the government will allow the deal to take place and expect opposition to it. In recent years, the FTC has scrutinized other retail mergers, including the proposed Staples and Office Depot deal, which lead to the companies cancelling the merger.