Kroger and Albertsons are joining forces, but have encountered an obstacle
7 september 2024 в 00:37
Two major US supermarkets, Kroger and Albertsons, sought to join forces after their boards of directors reached a unanimous agreement on a cash merger, first announced in October 2022.
However, the potential $ 24.6 billion deal faced another obstacle as the US government requested a preliminary injunction on the merger. In response, Kroger CEO Rodney McMullen promised to lower prices by $ 1 billion if the deal is completed.
«The day we come together will be the day of the beginning of price reductions», - McMullen said on Wednesday, speaking at a hearing in federal court in Portland, Oregon.
McMullen also noted that the merger would allow the company to lower prices and better compete with major retail chains such as Walmart, Amazon, and Costco. If combined, Albertsons and Kroger would control about 13% of food sales in the US, still less than Walmart’s nearly 22% market share.
When asked if Kroger would raise prices after the merger, he replied, «Absolutely not. We believe that over time, value will become increasingly important, and prices cannot be set higher than market prices».
Kroger and Albertsons first proposed a merger in October 2022, after Kroger agreed to acquire Albertsons. The Federal Trade Commission filed a lawsuit this year to block the deal, claiming that the merger would eliminate competition and raise food prices in the face of already high food inflation.
In his recent testimony, McMullen cited rising supplier costs, fuel prices, and credit card payment fees when asked by the company’s lawyer why prices had increased.
In a statement during the initial offer, McMullen said, «Albertsons Cos. has complementary geography and operates in parts of the country where there are virtually no Kroger stores. This merger advances our commitment to building a fairer and more sustainable food system by expanding our geographic presence into new regions to serve more Americans with fresh and affordable food and accelerates our position as a more attractive alternative to large and uncooperative competitors».
Kroger also stated in its press release, «As people increasingly shop for groceries and eat at home, Kroger and Albertsons Cos. will be better positioned to alleviate the inflationary pressures facing shoppers, with a combined portfolio of approximately 34,000 own-brand products in premium, natural and organic, and budget brands»
However, the potential $ 24.6 billion deal faced another obstacle as the US government requested a preliminary injunction on the merger. In response, Kroger CEO Rodney McMullen promised to lower prices by $ 1 billion if the deal is completed.
«The day we come together will be the day of the beginning of price reductions», - McMullen said on Wednesday, speaking at a hearing in federal court in Portland, Oregon.
McMullen also noted that the merger would allow the company to lower prices and better compete with major retail chains such as Walmart, Amazon, and Costco. If combined, Albertsons and Kroger would control about 13% of food sales in the US, still less than Walmart’s nearly 22% market share.
When asked if Kroger would raise prices after the merger, he replied, «Absolutely not. We believe that over time, value will become increasingly important, and prices cannot be set higher than market prices».
Kroger and Albertsons first proposed a merger in October 2022, after Kroger agreed to acquire Albertsons. The Federal Trade Commission filed a lawsuit this year to block the deal, claiming that the merger would eliminate competition and raise food prices in the face of already high food inflation.
In his recent testimony, McMullen cited rising supplier costs, fuel prices, and credit card payment fees when asked by the company’s lawyer why prices had increased.
In a statement during the initial offer, McMullen said, «Albertsons Cos. has complementary geography and operates in parts of the country where there are virtually no Kroger stores. This merger advances our commitment to building a fairer and more sustainable food system by expanding our geographic presence into new regions to serve more Americans with fresh and affordable food and accelerates our position as a more attractive alternative to large and uncooperative competitors».
Kroger also stated in its press release, «As people increasingly shop for groceries and eat at home, Kroger and Albertsons Cos. will be better positioned to alleviate the inflationary pressures facing shoppers, with a combined portfolio of approximately 34,000 own-brand products in premium, natural and organic, and budget brands»
© Zhinobaeva Margarita
