Kroger and Albertsons Companies announced today that they have entered into a definitive agreement under which the two companies will merge.
Under the terms of the merger, Kroger will acquire the outstanding shares of Albertsons’ common and preferred stock for an estimated consideration of $34.10 per share, implying a total enterprise value of approximately $24.6 billion.
The $24.6 billion total includes the assumption of approximately $4.7 billion of Albertsons’ net debt. As part of the transaction, Albertsons will pay a cash dividend of up to $4 billion to its shareholders. This cash dividend will be payable on 7 November 2022, to shareholders of record as of the close of business on 24 October 2022.
Together, Albertsons and Kroger employ more than 710,000 associates and operate a total of 4,996 stores, 66 distribution centres, 52 manufacturing plants, 3,972 pharmacies and 2,015 fuel centres.
Rodney McMullen, Kroger chairman and CEO, said: “Albertsons brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores. This merger advances our commitment to build a more equitable and sustainable food system by expanding our footprint into new geographies to serve more of America with fresh and affordable food.”
The agreement to merge the two complementary organisations will enable the combined companies to establish a national footprint, expanding customer reach and improving proximity to deliver fresh and affordable food to approximately 85 million households across both stores and digital channels.
“As a combined entity, we will be able to further enhance technology and innovation, promote healthier lifestyles, extend our health care and pharmacy network and grow our alternative profit businesses,” added McMullen.
Kroger plans to lower prices for customers and expects to do so by reinvesting around $0.5 billion of cost savings from synergies. It will also invest $1.3 billion into Albertsons Cos stores to enhance customer experience.
Kroger has invested $1.2 billion in associate compensation and benefits since 2018 and the combined company expects to invest a further $1 billion to continue raising associated wages after the close.
Vivek Sankaran, CEO of Albertsons, said: “Given the similarities in the culture and values at Kroger and Albertsons Cos., I am confident that the combination will also have a positive impact on our associates and the communities we are proud to serve. We look forward to working together with Kroger to capture the compelling opportunities ahead.”
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