Two of the biggest grocery chains in America are joining forces in attempts to remain competitive in an increasingly challenging retail market. Kroger, the largest supermarket operator in the U.S., announced on Friday that it plans to acquire rival grocer Albertsons in a deal worth around $25 billion.
Kroger is willing to pay $34.10 per Albertsons’ share, which represents around a 30 percent premium on the average price this past month. The shares of Kroger dipped 5.13 percent after the news about the acquisition was made public.
The deal is reportedly expected to be closed in 2024 and would be one of the largest mergers in U.S. retail history. Kroger and Albertsons have a combined 5,000 stores and 710,000 workers while generating $200 billion in sales.
The magnitude of the deal will have a significant effect on consumers, which is why the companies are bracing for the tough challenge of getting it approved by regulators. There are fears that the combined company will have too much control over the market and will be able to drive up the prices.
In an attempt to speed up the approval process, Kroger and Albertsons’ merger will be preceded by a launch of a spinoff company. The new company will be a standalone rival in the retail market and is expected to have around 400 stores.