CINCINNATI – Il Kroger Co . (NYSE: NYSE:) and Albertsons (NYSE:) Companies Inc. (NYSE: ACI) have revised their divestiture plan, increasing the number of stores and facilities to be sold to C&S Wholesale Grocers, LLC in response to regulator concerns antitrust. This move is part of the ongoing process to gain approval for their merger proposal, initially announced on October 14, 2022.
The revised package, announced today, aims to strengthen competition in overlapping geographies by including an additional 166 stores, bringing the total to 579 stores under various banners such as QFC, Mariano’s, Carrs and now Haggen. The upgrade also includes the sale of non-store assets, including a dairy, and expanded corporate infrastructure to support C&S operations post-merger.
Rodney McMullen, president and CEO of Kroger, emphasized that the updated plans will maintain Kroger’s commitments to customers, employees and communities, ensuring no store closures and the continuation of employment and existing collective bargaining agreements.
The merger is expected to bring lower prices and more choices for consumers and strengthen the future of unionized jobs in the food industry.
Eric Winn, CEO of C&S, expressed confidence that the expanded package will enable the stores’ continued success and welcomed the addition of experienced retail associates and private label brands to the C&S family.
The revised agreement includes licensing of the Albertsons banner in California and Wyoming and the Safeway banner in Arizona and Colorado. Kroger will repurpose the stores it retained in these states after the merger.
The updated divestiture package also maintains the sale of private label brands such as Debi Lilly Design, Primo Taglio and others to C&S, with additional access to the Signature and O Organics brands.
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Subject to regulatory clearance and the completion of the Kroger-Albertsons merger, C&S will purchase the assets for an all-cash consideration of approximately $2.9 billion.
The merger between Kroger and Albertsons is expected to create benefits for customers, including lower prices and greater access to fresh foods.
The information in this article is based on a press release from The Kroger Co.
Insights on InvestingPro
As The Kroger Co. (NYSE: KR) moves forward with its merger plans with Albertsons Companies Inc. (NYSE: ACI), investors are closely watching the company’s financial health and market position. According to recent data from InvestingPro, Kroger’s market capitalization stands at $40.83 billion, underscoring its significant presence in the industry. One noteworthy InvestingPro tip for Kroger is its history of dividend reliability, with the company having increased dividends for 18 consecutive years, a testament to its financial stability and commitment to shareholder returns.
Additionally, Kroger’s P/E ratio is currently at 18.93, with an adjusted P/E ratio for the trailing twelve months as of the fourth quarter of 2024 at 11.78, suggesting a potentially more attractive valuation relative to earnings. Another encouraging sign for investors is the company’s revenue growth over the trailing twelve months as of the fourth quarter of 2024, which saw an increase of 1.2%, indicating Kroger’s ability to expand its sales despite competitive and economic challenges. Furthermore, the company’s EBITDA growth over the same period was 7.8%, demonstrating operational efficiency and profitability.
For those considering investing in Kroger, it’s worth noting that InvestingPro offers 11 additional InvestingPro Tips, which can provide deeper insights into the company’s performance and potential. With the use of the coupon code PRONEWS24readers can get an additional 10% discount on their annual or two-year Pro and Pro+ subscriptions, granting them access to valuable information that could influence their investment decisions.
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