Kroger and Albertsons plan merger to combine 2 largest supermarket chains

In this June 26, 2019, file photo a customer exits a Kroger fueling center in Flowood, Miss. Two of the nation’s largest grocers have agreed to merge in a deal that would help them better compete with Walmart, Amazon and other major companies that have stepped into the grocery business. Kroger on Friday, Oct. 14, 2022 bid $20 billion for Albertsons Companies Inc., or $34.10 per share. (AP Photo/Rogelio V. Solis, File)

Kroger plans to buy Albertsons for $24.6 billion, a deal that would merge the two largest grocery-store chains in the U.S., the companies said on Friday.

The deal is likely to draw intense scrutiny from federal regulators and critics as it would form a new supermarket colossus at a time of soaring food costs. Grocery prices jumped 13% in September compared to a year ago.

Kroger is the largest supermarket operator in the U.S., with 420,000 employees and more than 2,700 stores, including Ralphs, Harris Teeter, Fred Meyer, and King Soopers. Albertsons is the country’s second-largest supermarket company, with 290,000 employees and almost 2,300 stores, including Safeway and Vons.

The two overlap in many markets and their tie-up would involve spinning off up to 375 stores into a separate company. In the Friday announcement, Kroger said it would “reinvest approximately half a billion dollars of cost savings from synergies to reduce prices for customers” and invest $1 billion to raise wages and benefits for workers.

For both companies, Walmart is a key competitor, as the retail giant is a top seller of groceries in the U.S., along with Amazon and smaller stores. Albertsons merged with rival Safeway in 2015, then unsuccessfully tried to merge with pharmacy chain Rite Aid in 2018 and eventually went public in 2020.

Antitrust regulators in the Biden administration have pushed back against megadeals, citing outsize impact on competition and consumer prices.

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