Kroger to merge with Albertsons?

[storewanderer]

This FTC really should not allow this. Let's look at what we had in 1998 and what is going to "merge" into a single owner in various markets.

I posted a message somewhere here a couple months ago saying these two chains would run each other into the ground then merge with each other. That appears to be exactly what is happening here.

In 1998, these chains combined had 75%+ marketshare in these markets. It is almost humorous how far they've fallen since "merging" with each other vs. how they did when they were stand alone chains. Of course the overwhelming losses are on the Albertsons/Safeway side, but even Kroger has had some total share losses.

Phoenix:
Smiths
Frys
Albertsons
Safeway

SoCal:
Lucky
Vons/Pavilions
Albertsons
Ralphs/F4L

Also at present in Colorado, Kroger has 33% marketshare and Albertsons/Safeway has 11% (sounds about right- awful operation there in Denver Division). But, in the 90's, King Soopers had nearly 50% marketshare. And you can bet that is going to be part of the argument the company uses to justify why it is okay to take this over- it won't even get marketshare back up as high as they had in the 90's.

[CalItalian]

The big question remains though....will the FTC scrutinize this more closely

By setting up SpinCo to take duplicate stores, Kroger/Albertsons seem to be answering any possible objections the FTC may have.

In the end I don't see why the FTC would block this though. Even combined Kroger/Albertsons aren't even approaching a monopoly of the grocery market.

Read the union statement. I expect the FTC & a number of state AG'S to block it on numerous anticompetitive issues.
https://www.ufcw21.org/news/2022/10/13/ ... ons-merger

[CalItalian]

I've thought more about this deal. Without repeating much of what has already been said I am trying to figure out WHAT is possibly positive about this deal to the consumer...

Albertsons has some debt that will come due in the next few years and the high interest rates will kill them. Some variable rate stuff, etc. They are up against a wall and it appears they have decided they must dissolve their company. I have no clue what Kroger is thinking- they must think they can become too big to fail or something.

The debt load won't vanish if Kroger buys them. If my numbers are right, Albertsons has $14B in debt, which if Kroger purchases them they lose that $24B and adds an additional $14B, so now you've got a low-margin grocery company pushing around close to $50B in debt! How on earth are they expected to compete with the more nimble regional competitors, Amazon, or Wal-Mart like that?

And it's not just $50 billion in debt. It's debt that is going to be at some very high interest rates, higher than we have today.

[storewanderer]

SpinCo- 100 to 375 stores to be spun off from Albertsons to create an "agile" competitor. How is ANY regulator going to pass this off? 100-375 stores spanning a dozen or more states is going to be anything but "agile." Remember "Dollar Express" which was formed when Family Dollar/Dollar Tree merged and created a chain of about 400 Family Dollar Stores from coast to coast owned by someone else, but still called Family Dollar, still supplied by Family Dollar... you didn't even know you were dealing with a different ownership until you went to the cash register and found you couldn't use Family Dollar Digital Coupons there as they had been cut off from that program.

If they sell stores, they need to sell ENTIRE DIVISIONS and a banner; what is sold needs to go under a single banner. I suggest they sell either the Albertsons banner or the Vons banner to this new owner. As far as I'm concerned, they need to basically sell off the entire Albertsons/Safeway operation in AZ, entire Albertsons/Safeway operation in CO (that won't help the buyer), and I guess sell Fred Meyer/QFC in the PNW. Even Boise is a problem with the Albertsons/Fred Meyer overlap... what do you do...

Not as clear on what they will need to sell off back east, but it appears UNFI/Shoppers is ready to grow again.

I still think they are going to ram this through. Cerberus is well connected and Kroger is a very large, very powerful company. They wouldn't have announced this if they didn't think they could get it done. Unless it was an effort to manipulate Albertsons stock price higher so certain shareholders could exit NOW...

[CalItalian]

They're expecting a very lengthy review. So am I.

"The transaction is expected to close in early 2024, subject to regulatory clearance and other closing conditions."

I hope they like double digit interest rates. That's what they'll see by then.

"early" 2024- basically a year from now. Seems like an aggressive timeline to me.

Would be better if this deal falls apart very quickly but I suppose if they want to blow money on trying to push it through (all costs will just get passed on to the customers).

Walgreens, Rite Aid merger announced on Oct. 27, 2015. Expected to close in the second half of 2016. After leaks from the FTC in mid-April 2017 started coming out that they would block the merger, it was called off at the end of June 2017.

This deal, if it ever happens, won't close until Q2 or Q3 of 2024. Right during an election year.

https://www.walgreensbootsalliance.com/ ... n-all-cash

[storewanderer]

Walgreens, Rite Aid merger announced on Oct. 27, 2015. Expected to close in the second half of 2016. After leaks from the FTC in mid-April 2017 started coming out that they would block the merger, it was called off at the end of June 2017.

This deal, if it ever happens, won't close until Q2 or Q3 of 2024. Right during an election year.

https://www.walgreensbootsalliance.com/ ... n-all-cash

There are still a lot of other parties selling food. Competitors keep opening stores. Kroger/Albertsons keep shrinking. There aren't many drugstore chains left.

I am sure Amazon's entry into the grocery business will be used as a reason why this Kroger/Albertsons deal is "okay." Even when their marketshare is basically nothing when it comes to actual grocery stores (physical).

Also you can bet the entry of Aldi into the Southwest will absolutely be mentioned (despite Aldi probably having almost no marketshare) as another "heavy competition."

Where this deal is the worst, is in markets where you will end up with a scenario of literally having only Kroger and Wal Mart selling groceries. There are some markets that will end up like that. Denver, Albuquerque, Boise, scattered markets in OR/WA. CA isn't one of those markets though, with the many many ethnic stores, regionals Raleys/Save Mart/Stater, discount formats Smart & Final/WinCo/Aldi, there is still going to be very robust competition in CA much of it non-Union.

But if Albertsons was doing so poorly they have to sell out to Kroger (Ahold obviously passed due to the distress of many parts of Albertsons), I expect they were on the verge of exiting a number of markets anyway so if they exit then a competitor is removed anyway...

I don't know but I think despite the concerns from the union and politicians this will go through.

The Walgreens-Rite Aid thing was during a different political administration and it was fought due to the pharmacy business/concerns from insurance groups and also drug wholesalers/drug companies. Those are very strong lobbying groups when you start looking at things related to medical. It wasn't about the candy aisle or cosmetics wall, it was about the prescriptions. This Albertsons/Kroger thing is about the canned foods aisle and the meat department and the reality is there are a LOT of other places out there selling these items.

[pseudo3d]

If their intention was to eliminate competition, then they could push things back by trading stores and exiting markets. You sell the remaining Randalls stores in Houston, the Colorado stores, the Arizona stores to Kroger, you spin off Ralphs and Mariano's and sell the best sites to Vons/Albertsons and Jewel-Osco, respectively...you dismantle QFC, Smith's exits Boise...

[CalItalian]

Walgreens, Rite Aid merger announced on Oct. 27, 2015. Expected to close in the second half of 2016. After leaks from the FTC in mid-April 2017 started coming out that they would block the merger, it was called off at the end of June 2017.

This deal, if it ever happens, won't close until Q2 or Q3 of 2024. Right during an election year.

https://www.walgreensbootsalliance.com/ ... n-all-cash

There are still a lot of other parties selling food. Competitors keep opening stores. Kroger/Albertsons keep shrinking. There aren't many drugstore chains left.

I am sure Amazon's entry into the grocery business will be used as a reason why this Kroger/Albertsons deal is "okay." Even when their marketshare is basically nothing when it comes to actual grocery stores (physical).

Also you can bet the entry of Aldi into the Southwest will absolutely be mentioned (despite Aldi probably having almost no marketshare) as another "heavy competition."

Where this deal is the worst, is in markets where you will end up with a scenario of literally having only Kroger and Wal Mart selling groceries. There are some markets that will end up like that. Denver, Albuquerque, Boise, scattered markets in OR/WA. CA isn't one of those markets though, with the many many ethnic stores, regionals Raleys/Save Mart/Stater, discount formats Smart & Final/WinCo/Aldi, there is still going to be very robust competition in CA much of it non-Union.

But if Albertsons was doing so poorly they have to sell out to Kroger (Ahold obviously passed due to the distress of many parts of Albertsons), I expect they were on the verge of exiting a number of markets anyway so if they exit then a competitor is removed anyway...

I don't know but I think despite the concerns from the union and politicians this will go through.

The Walgreens-Rite Aid thing was during a different political administration and it was fought due to the pharmacy business/concerns from insurance groups and also drug wholesalers/drug companies. Those are very strong lobbying groups when you start looking at things related to medical. It wasn't about the candy aisle or cosmetics wall, it was about the prescriptions. This Albertsons/Kroger thing is about the canned foods aisle and the meat department and the reality is there are a LOT of other places out there selling these items.

Food inflation, food insecurity, Kroger's ridiculous rants while closing down SoCal stores, its profits during Covid, stronger unions today, debt - along with the monopolies this is going to cause in many markets & setting up a weak SpinCo company post Haggen - are all going to be issues that will k.o. this buyout.

[veteran+]

Walgreens, Rite Aid merger announced on Oct. 27, 2015. Expected to close in the second half of 2016. After leaks from the FTC in mid-April 2017 started coming out that they would block the merger, it was called off at the end of June 2017.

This deal, if it ever happens, won't close until Q2 or Q3 of 2024. Right during an election year.

https://www.walgreensbootsalliance.com/ ... n-all-cash

There are still a lot of other parties selling food. Competitors keep opening stores. Kroger/Albertsons keep shrinking. There aren't many drugstore chains left.

I am sure Amazon's entry into the grocery business will be used as a reason why this Kroger/Albertsons deal is "okay." Even when their marketshare is basically nothing when it comes to actual grocery stores (physical).

Also you can bet the entry of Aldi into the Southwest will absolutely be mentioned (despite Aldi probably having almost no marketshare) as another "heavy competition."

Where this deal is the worst, is in markets where you will end up with a scenario of literally having only Kroger and Wal Mart selling groceries. There are some markets that will end up like that. Denver, Albuquerque, Boise, scattered markets in OR/WA. CA isn't one of those markets though, with the many many ethnic stores, regionals Raleys/Save Mart/Stater, discount formats Smart & Final/WinCo/Aldi, there is still going to be very robust competition in CA much of it non-Union.

But if Albertsons was doing so poorly they have to sell out to Kroger (Ahold obviously passed due to the distress of many parts of Albertsons), I expect they were on the verge of exiting a number of markets anyway so if they exit then a competitor is removed anyway...

I don't know but I think despite the concerns from the union and politicians this will go through.

The Walgreens-Rite Aid thing was during a different political administration and it was fought due to the pharmacy business/concerns from insurance groups and also drug wholesalers/drug companies. Those are very strong lobbying groups when you start looking at things related to medical. It wasn't about the candy aisle or cosmetics wall, it was about the prescriptions. This Albertsons/Kroger thing is about the canned foods aisle and the meat department and the reality is there are a LOT of other places out there selling these items.

Food inflation, food insecurity, Kroger's ridiculous rants while closing down SoCal stores, its profits during Covid, stronger unions today, debt - along with the monopolies this is going to cause in many markets & setting up a weak SpinCo company post Haggen - are all going to be issues that will k.o. this buyout.

I HOPE SO!!!!!!!!

[storewanderer]

Food inflation, food insecurity, Kroger's ridiculous rants while closing down SoCal stores, its profits during Covid, stronger unions today, debt - along with the monopolies this is going to cause in many markets & setting up a weak SpinCo company post Haggen - are all going to be issues that will k.o. this buyout.

I hope you're right. I am wondering who pushed this deal. I think Albertsons is who pushed this deal. My guess is after an Ahold deal failed (probably since Ahold realized they didn't want anything to do with Albertsons with many poorly performing regions and terrible pricing), Albertsons got desperate to find SOMEONE, ANYONE to buy them and for whatever reason Kroger decided to agree to this.

I think Albertsons would have been better off "restructuring" basically dumping every asset other than NorCal, SoCal, OR, WA, Southwest, and maybe Intermountain/Jewel, forming what would have largely been the strongest parts of the old Safeway, and just running those and focusing on defending those regions/growing in those regions, as they would have had a highly profitable high performing chain that would run in a number of growing markets with a lot of opportunities. So yes, dump off Texas, dump off PA, dump off Safeway Eastern Division, dump off Shaws, and dump off Denver. Let the old owning family have United back; they are still running it anyway. My suspicion is Kroger has very smart people running their market research operation and they did the math on this and realized an Albertsons like I propose above would cause a serious threat to multiple successful Kroger divisions and the best course of action for Kroger despite the many risks is this merger attempt.

I think Albertsons way of doing business in Las Vegas/Phoenix is putting some serious heat on Kroger; they seem to have figured out how to compete on all levels (price, quality, service, store appearance) using what is basically the old Albertsons LLC model but for whatever reason cannot or will not do that in the Safeway markets (Safeway probably just can't help itself from being lousy overpriced Safeway). If that happens across more markets it will be very difficult for Kroger and could threaten Kroger out west.