Kroger to merge with Albertsons?

[babs]

I don't see this going well in the Pacific Northwest. Safeway is in many towns big and small, and they, along with Albertsons and Haggen, operate in close proximity to Fred Meyer and QFC locations.

Could Fred Meyer be spun off to Target or Walmart? Or will this be another scenario where they unload stores to a chain that can't handle them and they end up getting stores back like the Albertsons/Haggen disaster? If there are multiple banners under the same ownership in one market, nobody wins. This merger would combine up to five brands in any given area.

Fred Meyer is large enough to be spun out on its own as an IPO.

Regardless, this merger isn't happening. Kroger has had so many other opportunities to grow. Buying Publix, Cub, Wegmans etc. Either they lost their minds or idiots now run Kroger. What makes them think the FTC would go for this especially in the food biz at a time when people are struggling to buy food. All this merger does is raise prices. It's a no go.

[SamSpade]

Bloomberg also reporting, includes chart with market share. It's amazing how many people really do live in Florida (and Atlanta, isn't that Publix's only other large market?)
Bloomberg: Kroger in Talks to Merge with Albertsons

Northwest -
Only possible company I could see a sale going to would be a combination of Walmart (if they want more neighborhood markets/delivery/pickup points) and URM stores. Idaho could see some sales to Associated (Utah) to either be operated directly by their retail division or their member-owners (ie. Ridleys / Broulims). I guess C&S could also try to grow their northwest footprint from that Troutdale distribution center beyond Target.

That's under a paywall

Maybe this version will work for you: (I had accessed through MSN, which appeared to allow for a few free Bloomberg articles)
https://www.spaywall.com/search/https:/ ... albertsons

[jamcool]

In Arizona if Raley's is the buyer I'd expect that Raley's (and not Bashas') would be the banner used for the stores there. The Bashas' banner is all but dead in Phoenix and Tucson and I don't see much value in slapping it on 134 stores. I also would think that the existing Bashas' store fleet in Phoenix and Tucson would close and Bashas' would simply remain in markets with no Safeway stores and the Navajo Nation

Then the chain would be dead....no one knows here what a Raley's is and the Basha name has a lot of goodwill (Basha High School, the Basha collection of Native American Art) Plus you have the reservation stores, which are the alternative to the trading post and their high prices. And the Food City and AJ's stores are the dominant chains in their niches. Raley's has its own problems in NorCal.

[HCal]

Here's my 2 cents on the matter.

1.) Whether or not the merger goes through I'd expect Kroger to announce that the regional banners are going away. I'd expect an announcement that everything will become branded as Kroger to come as part of any merger announcement.

If they do that, it will go down in history as the greatest marketing blunder of all time. There would be no faster way to destroy the entire company. Unless Kroger is secretly run by Walmart management, that is not going to happen.

2.) Kroger will probably divest the following of its own banners which are inconsistent with its re-bannering:

- QFC
- Food4Less / FoodsCO
- Mariano's

A wild card will be Harris - Teeter as it hasn't quite been fully Krogerized.

If that happens, maybe Save Mart will buy FoodsCo/Food4Less? It will give them more strength in the central Valley and bay area, and their first entry into Southern California.

3.) This deal will probably be structured similar to the initial Albertsons breakup where there are multiple parties involved. I'd imagine one of the parties might be Ahold-Delhaize (and others potentially are Save Mart and Raley's).

That's possible, but I would expect it to be more like the Albertsons/Safeway merger. The goal is to get bigger, not smaller. Obviously some stores will have to be divested, and they will need to find competent companies to acquire them. There aren't too many options to be honest. Maybe companies like Raley's and Publix might take some, or maybe the excess stores can be spun off into a "New Kroger LLC" like the original Albertsons breakup, but after the Haggen fiasco, I expect the FTC to scrutinize potential buyers a lot more closely. They aren't going to (or at least shouldn't) to allow small, badly run regionals to acquire entire divisions and double or triple their size.

[retailfanmitchell019]

So much to unpack here...

Honestly, this is frightening to say the least, as this would mean we would be in a duopoly with just Kroger and Walmart controlling mostly everything (similar to Australia with Coles and Woolworths).

If this merger goes through, I will no longer shop at Albertsons, as Kroger has already taken Ralphs downhill in the past few years with lower quality, elimination of their store brand, higher prices.
To be fair, Albertsons has gone downhill since the Safeway merger with higher prices and subpar store brands. Quality has remained the same (still decent). I still shop there for their chicken and cookies. That's the only thing good about Albertsons this point. And I'm saying this as a person who grew up shopping at Albertsons, during the Larry Johnston/SVU years.
I think SVU ran Albertsons better than the current Safeway fools. Yes, their prices weren't the best, but they still had decent quality and good store brands.
I will shop at Stater Bros, our beloved local chain, assuming this merger goes through. I did my shopping there during the pandemic anyway. And if Stater is bought out by "Krogway" (it should really be called "Armageddon Supermarkets, Inc"), then we are really, REALLY f-ed.
I just hope Hy-Vee or Publix wakes up and decides to expand to California.
I expect around 300 stores to be divested assuming the Biden FTC doesn't fully block this (which I hope they do).

Loblaws or Sobeys should expand south of their borders and do a deal with Albertsons. At least Safeway Canada would be reunited with the American Safeways. Jim Pattison, another Canadian company, has been doing some deals in the US lately. They should make an offer for the West Coast Albertsons operations.
Google should try and get in the supermarket business and make a counter-offer for Albertsons.

Sorry if I am venting here.

[CalItalian]

National politicians on both sides of the aisle are starting to chime in on this potential deal.
None of them, that I've seen today, are for it.
Bernie Sanders being the latest.
Food security, food inflation, corporate greed among many terms being used.

[Bagels]

I can not fathom this going through in my area without a "big" company taking many divested stores.

I do not imagine Staters as a candidate for this area.

Whom else?

An outsider?

A specialty (Whole Foods, Gelsons, ethnic, Amazon Fresh, etc.)?

This is very bad.........................very very bad!

Kroger would have to find a buyer for most of Albertsons West Coast operations (obviously excluding Northern California, etc.) if it wanted the merger to go through. Can't imagine the ex-Albertsons stores being too attractive -- probably even too leveraged to attract private equity. Maybe the stores will collectively be cheap enough and get Ahold Delhaize's attention - haven't they wanted to get rid of the US operations? Could be a solid opportunity to expand them and IPO them out.

[CalItalian]

If they wouldn't allow Staples & Office Depot to merge, I really don't see the FTC allowing this - at all.

[CalItalian]

Said to be an all cash deal from Kroger.

I can't see how the FTC will allow it - especially in many areas of the west. California AG would certainly sue.

They could sue and the same old thing would happen. Both are union operators. They can find another unionized buyer like Haggen to divest stores to.

Given there is basically no overlap in NorCal, the main issue is SoCal. I suspect they could broker a deal to divest the entire F4L operation (including the Chicago part of it) to satisfy concerns.

Not a fan of this deal. I believe it will lead to lower quality and higher prices.

Don't see it. To see this potential deal clearly, you have to read the political tea leaves. Absolutely 180 from what would be allowed today.

I expect the FTC will sue to completely block this possible deal. It would be joined by numerous state AG's.

[CalItalian]

I don't see this going well in the Pacific Northwest. Safeway is in many towns big and small, and they, along with Albertsons and Haggen, operate in close proximity to Fred Meyer and QFC locations.

Could Fred Meyer be spun off to Target or Walmart? Or will this be another scenario where they unload stores to a chain that can't handle them and they end up getting stores back like the Albertsons/Haggen disaster? If there are multiple banners under the same ownership in one market, nobody wins. This merger would combine up to five brands in any given area.

Fred Meyer is large enough to be spun out on its own as an IPO.

Regardless, this merger isn't happening. Kroger has had so many other opportunities to grow. Buying Publix, Cub, Wegmans etc. Either they lost their minds or idiots now run Kroger. What makes them think the FTC would go for this especially in the food biz at a time when people are struggling to buy food. All this merger does is raise prices. It's a no go.

The days of nearly 0% cash are over. Raising cash for spinoffs won't be easy - and get harder everyday.
Grocery isn't a big growth sector that attracts a lot of cash.