Kroger to merge with Albertsons?

[storewanderer]

Or Cerberus sells their shares on the open market when the stock market goes back up. I think that's the most likely outcome as this merger isn't happening. 100% it gets blocked.

But... if the market goes back, will ACI shares go up more? I am not so sure. ACI has had strong results since the COVID; they picked up a lot of traffic and their stores are clearly busier and have clearly retained at least some of the traffic they picked up during COVID, in most markets I have been to, which is quite a few. Denver being the exception. The problem is ACI has made basically useless acquisitions (like Kings), their store remodel program the past couple years is a joke that does nothing to improve the store or draw in more customers (no new offerings are being added- just repainting into that boring Florida decor), and in the past year they have taken price increases the fastest and seem to have some very steep price increases compared to the Kroger. So I don't see a great future outlook for ACI should it remain an independent company. It is getting too much like the old Safeway in how it does things and that will end exactly how it ended for Safeway.

If the merger is being blocked, best case scenario is it gets blocked promptly and everyone wishes each other well and goes their separate ways to figure out what the next steps are.

Kroger needs to get going building new stores out west. Albertsons... I don't know what they need to do, that will be up to Cerberus.

I still have very mixed feelings about this merger. My instinct tells me we would be better off as consumers more than not (sure Kroger will likely bring better pricing to NorCal but that is one market and frankly I am not sure how much that market cares about price anyway), and it would be better for employees, better for vendors, better for neighborhoods the stores are in, if it did not go through... despite how interesting it would be to watch these chains merge together and how much I'm looking forward to watching the integration process.

[Bagels]

Or Cerberus sells their shares on the open market when the stock market goes back up. I think that's the most likely outcome as this merger isn't happening. 100% it gets blocked.

But... if the market goes back, will ACI shares go up more? I am not so sure. ACI has had strong results since the COVID; they picked up a lot of traffic and their stores are clearly busier and have clearly retained at least some of the traffic they picked up during COVID, in most markets I have been to, which is quite a few. Denver being the exception. The problem is ACI has made basically useless acquisitions (like Kings), their store remodel program the past couple years is a joke that does nothing to improve the store or draw in more customers (no new offerings are being added- just repainting into that boring Florida decor), and in the past year they have taken price increases the fastest and seem to have some very steep price increases compared to the Kroger. So I don't see a great future outlook for ACI should it remain an independent company. It is getting too much like the old Safeway in how it does things and that will end exactly how it ended for Safeway.

If the merger is being blocked, best case scenario is it gets blocked promptly and everyone wishes each other well and goes their separate ways to figure out what the next steps are.

Kroger needs to get going building new stores out west. Albertsons... I don't know what they need to do, that will be up to Cerberus.

I still have very mixed feelings about this merger. My instinct tells me we would be better off as consumers more than not (sure Kroger will likely bring better pricing to NorCal but that is one market and frankly I am not sure how much that market cares about price anyway), and it would be better for employees, better for vendors, better for neighborhoods the stores are in, if it did not go through... despite how interesting it would be to watch these chains merge together and how much I'm looking forward to watching the integration process.

The era of Yucapi, Kroger, Safeway and especially Albertsons attempting to build a national supermarket chain is over. There are few traditional grocers still actively expanding – and it’s mostly local/regional chains and ultimately the stores will simply replace competitors’ older options. E.g. HEB may soon dominate Dallas, but the market isn’t going to emerge with four mega chains – Kroger and Walmart will survive, Albertsons won’t.

I like Albertsons. Its traditional promotional (high-low) strategy works well for me, and I find its bakery, deli & meat counter to be much better than Kroger. But the Albertsons I like is going to disappear, anyway. They’ve clearly cut back on promotions, and they’re not coming back (CEO Sankaran commented that they were overlying on promotions). We spent 80%+ of our grocery spending at Albertsons from 2017-2021, but so far it’s been about 70% at Ralph’s this year. Over 200 Albertsons stores literally existed in SoCal during the SuperValu days, recording less than 30% (average per store) sales as Ralphs at one point. People are literally shopping there for convenience at that point (e.g. picking up a few items after work, but stopping at Ralphs over the weekend).

Kroger will delivery a better shopping experience for the majority of Albertsons shoppers – nicer stores and cheaper baskets. Cerberus brought Albertsons back from the dead, but they want to bury it again. Rather than whine about what could have been, we have to accept it for what it is. And Kroger is the best option.

[pseudo3d]

Or Cerberus sells their shares on the open market when the stock market goes back up. I think that's the most likely outcome as this merger isn't happening. 100% it gets blocked.

But... if the market goes back, will ACI shares go up more? I am not so sure. ACI has had strong results since the COVID; they picked up a lot of traffic and their stores are clearly busier and have clearly retained at least some of the traffic they picked up during COVID, in most markets I have been to, which is quite a few. Denver being the exception. The problem is ACI has made basically useless acquisitions (like Kings), their store remodel program the past couple years is a joke that does nothing to improve the store or draw in more customers (no new offerings are being added- just repainting into that boring Florida decor), and in the past year they have taken price increases the fastest and seem to have some very steep price increases compared to the Kroger. So I don't see a great future outlook for ACI should it remain an independent company. It is getting too much like the old Safeway in how it does things and that will end exactly how it ended for Safeway.

If the merger is being blocked, best case scenario is it gets blocked promptly and everyone wishes each other well and goes their separate ways to figure out what the next steps are.

Kroger needs to get going building new stores out west. Albertsons... I don't know what they need to do, that will be up to Cerberus.

I still have very mixed feelings about this merger. My instinct tells me we would be better off as consumers more than not (sure Kroger will likely bring better pricing to NorCal but that is one market and frankly I am not sure how much that market cares about price anyway), and it would be better for employees, better for vendors, better for neighborhoods the stores are in, if it did not go through... despite how interesting it would be to watch these chains merge together and how much I'm looking forward to watching the integration process.

The era of Yucapi, Kroger, Safeway and especially Albertsons attempting to build a national supermarket chain is over. There are few traditional grocers still actively expanding – and it’s mostly local/regional chains and ultimately the stores will simply replace competitors’ older options. E.g. HEB may soon dominate Dallas, but the market isn’t going to emerge with four mega chains – Kroger and Walmart will survive, Albertsons won’t.

I like Albertsons. Its traditional promotional (high-low) strategy works well for me, and I find its bakery, deli & meat counter to be much better than Kroger. But the Albertsons I like is going to disappear, anyway. They’ve clearly cut back on promotions, and they’re not coming back (CEO Sankaran commented that they were overlying on promotions). We spent 80%+ of our grocery spending at Albertsons from 2017-2021, but so far it’s been about 70% at Ralph’s this year. Over 200 Albertsons stores literally existed in SoCal during the SuperValu days, recording less than 30% (average per store) sales as Ralphs at one point. People are literally shopping there for convenience at that point (e.g. picking up a few items after work, but stopping at Ralphs over the weekend).

Kroger will delivery a better shopping experience for the majority of Albertsons shoppers – nicer stores and cheaper baskets. Cerberus brought Albertsons back from the dead, but they want to bury it again. Rather than whine about what could have been, we have to accept it for what it is. And Kroger is the best option.

Kroger is willing to drop $25B and absorb debt to add 2,000+ new stores, so clearly they're interested still in empire building.

[arizonaguy]

Or Cerberus sells their shares on the open market when the stock market goes back up. I think that's the most likely outcome as this merger isn't happening. 100% it gets blocked.

But... if the market goes back, will ACI shares go up more? I am not so sure. ACI has had strong results since the COVID; they picked up a lot of traffic and their stores are clearly busier and have clearly retained at least some of the traffic they picked up during COVID, in most markets I have been to, which is quite a few. Denver being the exception. The problem is ACI has made basically useless acquisitions (like Kings), their store remodel program the past couple years is a joke that does nothing to improve the store or draw in more customers (no new offerings are being added- just repainting into that boring Florida decor), and in the past year they have taken price increases the fastest and seem to have some very steep price increases compared to the Kroger. So I don't see a great future outlook for ACI should it remain an independent company. It is getting too much like the old Safeway in how it does things and that will end exactly how it ended for Safeway.

If the merger is being blocked, best case scenario is it gets blocked promptly and everyone wishes each other well and goes their separate ways to figure out what the next steps are.

Kroger needs to get going building new stores out west. Albertsons... I don't know what they need to do, that will be up to Cerberus.

I still have very mixed feelings about this merger. My instinct tells me we would be better off as consumers more than not (sure Kroger will likely bring better pricing to NorCal but that is one market and frankly I am not sure how much that market cares about price anyway), and it would be better for employees, better for vendors, better for neighborhoods the stores are in, if it did not go through... despite how interesting it would be to watch these chains merge together and how much I'm looking forward to watching the integration process.

I am absolutely not in favor of this merger in any way. Living in Phoenix there are currently dozens of empty boxes from the Albertsons collapse, Bashas' bankruptcy and continued struggles, Safeway struggles, Fry's store fleet rationalization and the Albertsons / Safeway post merger store fleet rationalization. This merger will at a minimum double the amount of empty grocery boxes around Phoenix (especially if SpinCo is only going to take 100 - 375 stores). I currently live about 1/2 a mile from a Safeway store in a fairly healthy shopping center but that Safeway is only 1/2 a mile from a 6 year old Fry's Marketplace store. It doesn't take a rocket scientist to figure out which store will survive.

I actually prefer shopping at a combination of Safeway, WinCo and Walmart for most of my groceries as I buy the "specials" at Safeway, play it's Just 4 U game and then take advantage of the EDLP at WinCo and Walmart. Fry's is too big, too crowded and lacks perimeter quality for me. This merger will simply make that problem worse.

[Bagels]

Or Cerberus sells their shares on the open market when the stock market goes back up. I think that's the most likely outcome as this merger isn't happening. 100% it gets blocked.

But... if the market goes back, will ACI shares go up more? I am not so sure. ACI has had strong results since the COVID; they picked up a lot of traffic and their stores are clearly busier and have clearly retained at least some of the traffic they picked up during COVID, in most markets I have been to, which is quite a few. Denver being the exception. The problem is ACI has made basically useless acquisitions (like Kings), their store remodel program the past couple years is a joke that does nothing to improve the store or draw in more customers (no new offerings are being added- just repainting into that boring Florida decor), and in the past year they have taken price increases the fastest and seem to have some very steep price increases compared to the Kroger. So I don't see a great future outlook for ACI should it remain an independent company. It is getting too much like the old Safeway in how it does things and that will end exactly how it ended for Safeway.

If the merger is being blocked, best case scenario is it gets blocked promptly and everyone wishes each other well and goes their separate ways to figure out what the next steps are.

Kroger needs to get going building new stores out west. Albertsons... I don't know what they need to do, that will be up to Cerberus.

I still have very mixed feelings about this merger. My instinct tells me we would be better off as consumers more than not (sure Kroger will likely bring better pricing to NorCal but that is one market and frankly I am not sure how much that market cares about price anyway), and it would be better for employees, better for vendors, better for neighborhoods the stores are in, if it did not go through... despite how interesting it would be to watch these chains merge together and how much I'm looking forward to watching the integration process.

I am absolutely not in favor of this merger in any way. Living in Phoenix there are currently dozens of empty boxes from the Albertsons collapse, Bashas' bankruptcy and continued struggles, Safeway struggles, Fry's store fleet rationalization and the Albertsons / Safeway post merger store fleet rationalization. This merger will at a minimum double the amount of empty grocery boxes around Phoenix (especially if SpinCo is only going to take 100 - 375 stores). I currently live about 1/2 a mile from a Safeway store in a fairly healthy shopping center but that Safeway is only 1/2 a mile from a 6 year old Fry's Marketplace store. It doesn't take a rocket scientist to figure out which store will survive.

I actually prefer shopping at a combination of Safeway, WinCo and Walmart for most of my groceries as I buy the "specials" at Safeway, play it's Just 4 U game and then take advantage of the EDLP at WinCo and Walmart. Fry's is too big, too crowded and lacks perimeter quality for me. This merger will simply make that problem worse.

The problem is, if the merger is blocked, what's the alternate option? Again... Cerberus is the de facto owner of Albertsons, and they want out - but they want their payday. If the merger is blocked, it's probable that Cerberus will sell of Albertsons assets. Several sources have speculated for years that between 1/3 and 1/2 of Albertsons profit is generated in Northern California. Toss in Jewel, and that's more than half the chains' profit. If Albertsons unloaded prime locations in the divisions it did keep, it probably wouldn't last long...

[storewanderer]

So there is part of the compensation for Albertsons; a $6.85 per share dividend payable to shareholders.

That dividend is being paid to shareholders who held shares as of yesterday 10/24 and is being paid out on approximately 11/07.

This is part of the compensation for the merger. Albertsons stock will drop by this amount when it is paid (may have already dropped to factor it in).

I guess Albertsons is paying this dividend to shareholders now so they get some of the compensation for selling the company now. Then whatever Kroger pays Albertsons when the deal finally goes through, the amount of this special dividend will be deducted from whatever Kroger pays Albertsons when the deal finally goes through..........

So let's say the deal doesn't go through. Albertsons just paid out to shareholders a special dividend that was effectively 20% of the company's stock market value. This took a cool few billion dollars of Albertsons free cash flow to make happen. That would definitely impact them very seriously on a go forward basis if they do not merge with Kroger; it would hinder their ability to pay down debt, invest in remodels/new stores, seek acquisitions, pricing, etc.

I just don't see this ending well for Albertsons if the merger doesn't go through. I think Cerberus and Rodney of Kroger know full well this will go through; they are well connected and will get this done. The fact that they are paying this special dividend tells me this deal is "in the bag."

It is possible they have a contingency plan to just give Kroger the good assets that don't overlap and let the rest of it just do a Haggen (which as we know made that investment group money to let go the way it went). They could sell the assets without overlap to Kroger and bypass FTC, and move the rest to what would effectively be SpinCo and again bypass FTC.

[retailfanmitchell019]

Honestly, I think the Safeway merger was the WORST mistake Albertsons made. Safeway was getting saddled with debt after the recession it seems. If Safeway were spun off to Ahold or somebody else, as Storewanderer has said, Albertsons would be running smoothly today with the LLC formula: a chain with the Old Albertsons mindset pre-Larry, with strong quality and fair prices. Who knows, Albertsons could have bought back their original private labels from SuperValu, which should've been parted out like Fleming after the NAI failure.
Between March 2013 and January 2015 (when the Safeway merger was finalized), the old Albertsons magic was back. Their slogan at the time, "You're in for something fresh" made sense. Albertsons had fresh ideas and thinking at the time. Bob Miller saved Albertsons.

Arguably, Larry Johnston was the beginning of the end for Albertsons. Buying Shaw's (which Sainsbury should've sold to Kroger back then) gave Albertsons even more debt than they had after acquiring ASC. Introducing a club card did damage also. Albertsons previously didn't require a card to get lower prices. Also, Larry, an executive at GE, had zero experience in the grocery industry. Yes, Albertsons needed new ideas at the time, but picking someone from outside grocery, let alone retail, is a dumb idea. Had a guy from inside the grocery industry replaced Gary Michael as the next CEO at Old Albertsons, they'd still be alive today.

SpinCo, after Albertsons assets not overlapping with Kroger are sold to Kroger, should be casted off to Loblaws. This would mean the return of President's Choice to the US. A few people (although not many) in California remember the PC brand being sold at Lucky. Loblaws is definitely winning Canada's grocery wars.

[kr.abs.swy]

Safeway was INVESTMENT GRADE at the time of the Albertsons acquisition. Safeway had, without question, a much stronger balance sheet. The reason that Albertsons was the acquirer was that their investor group was willing to commit the funds needed to buy Safeway.

Honestly, I think the Safeway merger was the WORST mistake Albertsons made. Safeway was getting saddled with debt after the recession it seems. If Safeway were spun off to Ahold or somebody else, as Storewanderer has said, Albertsons would be running smoothly today with the LLC formula: a chain with the Old Albertsons mindset pre-Larry, with strong quality and fair prices.

[jamcool]

Loblaws was previously in the US via the National and Finast chains- both sold off. Why re-enter the competitive US market?

[pseudo3d]

So there is part of the compensation for Albertsons; a $6.85 per share dividend payable to shareholders.

That dividend is being paid to shareholders who held shares as of yesterday 10/24 and is being paid out on approximately 11/07.

This is part of the compensation for the merger. Albertsons stock will drop by this amount when it is paid (may have already dropped to factor it in).

I guess Albertsons is paying this dividend to shareholders now so they get some of the compensation for selling the company now. Then whatever Kroger pays Albertsons when the deal finally goes through, the amount of this special dividend will be deducted from whatever Kroger pays Albertsons when the deal finally goes through..........

So let's say the deal doesn't go through. Albertsons just paid out to shareholders a special dividend that was effectively 20% of the company's stock market value. This took a cool few billion dollars of Albertsons free cash flow to make happen. That would definitely impact them very seriously on a go forward basis if they do not merge with Kroger; it would hinder their ability to pay down debt, invest in remodels/new stores, seek acquisitions, pricing, etc.

I just don't see this ending well for Albertsons if the merger doesn't go through. I think Cerberus and Rodney of Kroger know full well this will go through; they are well connected and will get this done. The fact that they are paying this special dividend tells me this deal is "in the bag."

It is possible they have a contingency plan to just give Kroger the good assets that don't overlap and let the rest of it just do a Haggen (which as we know made that investment group money to let go the way it went). They could sell the assets without overlap to Kroger and bypass FTC, and move the rest to what would effectively be SpinCo and again bypass FTC.

I'm afraid you're probably right. The one thing that is giving me pause on if the merger would happen or not is Kroger being vague on how they plan to restructure the company's divisions.