Grocery Store Giants Kroger and Albertsons to Combine

Kevin Alexander

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Kroger and Albertsons storefronts. On Friday the two chains agreed to a merger.Kroger/Albertsons

On Friday, Grocery giants Kroger and Albertsons announced merger plans, with Kroger buying its rival for $24.6 billion. Kroger is the 2nd largest grocery store in the country and operates several regional chains, such as Ralph's, King Soopers, and Pick N' Save.

Boise-based Albertsons is the nation's fourth-largest grocer. In addition to stores under its own brand, it controls multiple other chains such as Safeway and Pavilions.

Together, Albertsons and Kroger currently employ more than 710,000 associates and operate a total of 4,996 stores, 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies, and 2,015 fuel centers.

On LinkedIn, Albertson's CEO Vivek Sankaran posted a memo he'd shared with the company's employees, stating in part:

This merger will bring together Albertsons and Kroger’s iconic brands to deliver quality, value and convenience to approximately 85 million households. Together, the combined company will continue to accelerate omnichannel capabilities, expand its fresh portfolio, and be better positioned to reduce the inflationary pressure facing shoppers through a combined portfolio of private label products and investments into reducing prices.

Kroger Chairman and CEO Rodney McMullen echoed the sentiment stating:

"We are bringing together two purpose-driven organizations to deliver superior value to customers, associates, communities, and shareholders...Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores...We'll also be able to further enhance technology and innovation, promote healthier lifestyles, extend our health care and pharmacy network and grow our alternative profit businesses. We believe this transaction will lead to faster and more profitable growth and generate greater returns for our shareholders."

The combined company would be nearly as large as sector leader, Walmart. The deal-which still requires regulatory approval- would help the company compete with Walmart as well as help it adapt quickly to changing consumer habits, like online shopping and curbside pickup.

On Friday, Albertsons stock was down 7.5% on the news. Shares of Kroger were down approximately 8% in late trading.

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