News from Kroger dominated headlines this week as the company takes on the FTC and others.
1. Kroger’s Legal Dealings Dominate the News
The Kroger Co. has dominated the news recently, and shows no signs of slowing down. This week, U.S. Senators Elizabeth Warren (D-Mass.) and Robert P. Casey, Jr. (D-Pa.) sent a letter to Kroger Chairman and CEO Rodney McMullen questioning the retailer’s use of electronic shelf labels.
Warren and Casey expressed concerns about what they deemed dynamic pricing from Kroger and other American grocers. “Widespread adoption of digital price tags appears poised to enable large grocery stores to squeeze consumers to increase profits,” they wrote. The politicians also sounded a cautionary note about “sensitive consumer data,” through the use of cameras on ESLs displays.
Kroger maintains that its pricing methods are ultimately shopper-centric and can benefit the overall market in a number of ways. “Any test of electronic shelf tags is to lower prices more for customers where it matters most. To suggest otherwise is not true,” said a company spokesperson.
In other legal news this week, Kroger is pushing back against the Federal Trade Commission’s motion for a preliminary injunction against its proposed $24.6 billion merger with Albertsons Cos. The FTC is seeking “extraordinary relief” to stop the companies from proceeding with their planned tie-up, but according to Kroger, the organization has failed to satisfy its burden to show that an injunction is permissible or warranted.
In a response to the FTC’s challenge, Kroger stated that it must “expand, adapt, and most importantly, continue to lower prices to compete with global behemoths. Simply put, modern competition for groceries and ‘household goods’ extends far beyond Kroger and Albertsons, and Kroger must embrace this reality to compete effectively and offer consumers the lowest possible prices, while offering better paid jobs to union workers.”
Kroger addressed cost concerns by doubling its proposed price cuts upon the completion of the merger, according to a report from Bloomberg.
Finally, readers were interested in news of a Chicago judge dismissing a lawsuit brought against Kroger regarding its use of the phrase “farm fresh” to describe its eggs that were produced in an industrial environment. U.S. District Judge Charles Kocoras ruled that the grocer’s use of the phrase was indeed not misleading to reasonable consumers.
2. Mars Plans to Acquire Kellanova
It turns out the rumors about an acquisition from Mars Inc. were true. Family-owned Mars, a global leader in pet care, snacking and food, said this week that it plans to acquire Kellanova, a top company in worldwide snacking, international cereal and noodles, North American plant-based foods, and frozen breakfast foods.
The companies have entered into a definitive agreement under which Mars will buy Kellanova for $83.50 per share in cash, for a total consideration of $35.9 billion, including assumed net leverage. According to the companies, this is the largest acquisition of 2024 to date, while analysts described it as the largest CPG transaction since the merger between Kraft and H.J. Heinz in 2015.
Once the transaction is complete, Kellanova will become part of Mars Snacking, headed by Global President Andrew Clarke and based in Chicago. Battle Creek, Mich. – the historic hometown of Kellogg’s brands – will remain a core location for the combined organization.