CINCINNATI, Ohio — In a bid to better compete with retail behemoths such as Walmart and Amazon, two of the largest U.S. grocers announced plans Friday to merge in a deal worth an estimated $24.6 billion.
Cincinnati, Ohio-based Kroger has agreed to buy Boise, Idaho-based Albertsons Companies Inc. for $20 billion while also assuming roughly $4.7 billion of its longtime rival’s debt, WHIO-TV reported.
According to CNBC, the two chains employ more than 700,000 people across roughly 5,000 stores.
Prior to Friday’s announcement, Kroger operated about 2,800 stores in 35 states, including brands such as Ralphs, Smith’s and Harris Teeter. Meanwhile, Alberstons operated roughly 2,220 stores in 34 states, including brands such as Safeway, Jewel Osco and Shaw’s, WHIO reported.
According to CNBC, those figures made Kroger the second-largest grocer by market share in the U.S., trailing only Walmart, while Albertsons ranked fourth behind Costco. The merger is intended to create a stronger second-place competitor to Walmart.
Both companies’ boards unanimously approved the agreement, which also requires regulatory approval, the network reported.
The deal, slated to close in early 2024, is expected to not only “expand customer reach” but also improve delivery efficiency of “affordable food” to an estimated 85 million households, The Produce News reported.
Meanwhile, J.P. Morgan analyst Ken Goldman confirmed to WHIO that, assuming the sale or closure of around 400 stores for antitrust reasons, the reformulated chain should control about 13% of the U.S. grocery market. By contrast, Walmart currently controls about 22% of the market, while Costco controls 6%, Amazon controls 3% via its 2017 purchase of Whole Foods and discount chains such as Aldi and Dollar General combine to control 4%.
Rachel Shemirani, senior vice president of Boway, California-based Barons Market, said that the merger actually creates greater opportunity for independent grocers.
“A Kroger-Albertsons merger puts independent grocers like Barons Market in a unique position to nurture and cultivate connections with potential shoppers, current customers and the community. Simply put, we do things differently and better than the large grocery stores,” Shemirani said in a statement emailed to Cox Media Group’s National Content Desk.