Merger activity increased last week with five new deals announced and six deals completed. Three of the five deals announced were potential deals in the works.
Kroger and Albertsons – The Merger
On October 14, 2022, the 2nd and 4th largest supermarket chains in the U.S. announced that they were joining forces to potentially create one of the largest grocery chains in the country with 4,996 stores covering about 85 million consumers.
Founded in 1883 and headquartered in Cincinnati, Kroger (KR) operates 2,750 stores across the United States and has an enterprise value of over $50 billion. Albertsons (ACI), based in Boise, Idaho, operates 2,273 stores and sports an enterprise value of $25.5 billion.
Earlier this year, Albertsons had announced that it was reviewing potential strategic alternatives. The company previously tried to go public in 2018 through a merger with Rite Aid (RAD) but the merger, much to my surprise, was rejected by Rite Aid investors. Albertsons finally went public in 2020 in an IPO priced at $16, which was below its initial price range of $18 to $20 per share and was a downsized $800 million IPO. Kroger entered into a definitive agreement to acquire Albertsons last Friday, for $24.6 billion. The combined company is expected to represent a major industry consolidation and could pose competitive threat to the likes of Walmart and other grocery chains.