CINCINNATI - The Kroger Co . (NYSE: NYSE:KR) and Albertsons (NYSE:ACI) 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 antitrust regulator concerns. This move is part of the ongoing process to secure approval for their proposed merger, initially announced on October 14, 2022.
The amended package, announced today, aims to enhance competition in overlapping geographic areas 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 update also comprises the sale of non-store assets, including one dairy facility, and an expanded corporate infrastructure to support C&S's operations post-merger.
Rodney McMullen, Kroger's Chairman and CEO, emphasized that the updated plans would maintain Kroger's commitments to customers, associates, and communities, ensuring no store closures and the continuation of employment and existing collective bargaining agreements.
The merger is projected to bring lower prices and more choices to consumers and strengthen the future of unionized grocery jobs.
Eric Winn, CEO of C&S, expressed confidence that the expanded package would enable the continued success of the stores and welcomed the addition of experienced retail associates and private label brands into the C&S family.
The revised agreement includes licensing the Albertsons banner in California and Wyoming and the Safeway banner in Arizona and Colorado. Kroger will re-banner retained stores in these states post-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 added access to Signature and O Organics brands.
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 increased access to fresh food.
The information in this article is based on a press release statement from The Kroger Co.
InvestingPro Insights
As The Kroger Co. (NYSE: KR) moves forward with its merger plans with Albertsons Companies Inc. (NYSE: ACI), investors are keenly observing the company's financial health and market position. According to recent data from InvestingPro, Kroger's market capitalization stands robust at $40.83 billion, underlining its significant presence in the industry. A noteworthy InvestingPro Tip for Kroger is its history of dividend reliability, with the company having raised its dividend for 18 consecutive years, a testament to its financial stability and commitment to shareholder returns.
Furthermore, Kroger's P/E ratio is currently at 18.93, with an adjusted P/E ratio for the last twelve months as of Q4 2024 at 11.78, suggesting a potentially more attractive valuation relative to earnings. Another encouraging sign for investors is the company's revenue growth in the last twelve months as of Q4 2024, which posted a 1.2% increase, indicating Kroger's ability to expand its sales amidst competitive and economic challenges. Additionally, the company's EBITDA growth during the same period was 7.8%, showcasing operational efficiency and profitability.
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