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Boise-based Albertsons Companies will merge with Cincinnati-based Kroger. The announcement was made Friday morning.
Under the merger, Albertsons and Kroger will operate a total of 4,996 stores, 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies, and 2,015 fuel centers. Additionally, the combined will employ more than 710,000 people.
According to a news release, the merger will enable customers better access to fresher food faster, and will provide for a more seamless shopping experience.
“Today’s announcement marks the successful outcome of the Board-led review of strategic alternatives Albertsons Cos. announced in February,” said Chan Galbato, Co-Chair of the Albertsons Cos. Board of Directors and Chief Executive Officer of Cerberus Operations. “This transaction with Kroger provides substantial value to shareholders and exciting opportunities for associates to be part of a combined organization with the ability to better support the lives and health of millions of Americans.”
Rodney McMullen, Kroger Chairman and Chief Executive Officer, will continue serving as Chairman and CEO of the combined company.
Kroger’s Chief Financial Officer Garry Millerchip will also continue his role under the merged company.
The announcement didn’t say where the combined company would be headquartered.
“Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores,” said McMullen. “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 and accelerates our position as a more compelling alternative to larger and non-union competitors.”
Under the agreement, Kroger will acquire all of the outstanding shares of Albertsons Companies, Inc. common and preferred stock for an estimated total consideration of $34.10 per share, implying a total enterprise value of approximately $24.6 billion, including the assumption of approximately $4.7 billion of Albertson’s net debt.
The news release also says that subject to the outcome of the divestiture process, Albertsons is prepared to establish an Albertsons Cos. subsidiary called SpinCo. SpinCo would be spun-off to Albertsons shareholders immediately prior to the merger closing and operate as a standalone public company. Kroger and Albertsons Cos. have agreed to work together to determine which stores would comprise SpinCo, as well as the pro forma capitalization of SpinCo. The establishment of SpinCo, which is estimated to comprise between 100 and 375 stores.
The transaction is expected to close in early 2024.