Kroger Doubles Planned Price Cuts to $1B If Merger Goes Through
With grocery prices front and center this summer – from everyday conversations to presidential platforms to fresh data on easing-but-lingering inflation – The Kroger Co. is working to move ahead with its planned merger with Albertsons Cos., by, in part, addressing cost concerns. According to a report from Bloomberg, the grocer intends to double its proposed price cuts upon the completion of the $25.6 billion deal.
“We can confirm this number is correct and consistent with what we continue to share with regulators," Kroger spokesperson Erin Rolfes told Progressive Grocer. "As we’ve prepared for integration since announcing our planned merger nearly two years ago, we continued our ongoing work to confirm and increase opportunities to generate efficiencies to invest back in customer prices, associate wages and store experience. After the merger closes, Kroger will invest $1 billion to lower Albertsons’ prices, consistent with Kroger’s track record of fighting inflation and providing value to customers.”
Kroger had previously announced $500 million in price cuts under the broader umbrella, along with a $1 billion investment in employee wages and benefits. The doubling of the price cuts comes as the retail giant is facing off against the Federal Trade Commission (FTC) in a trial set to begin later this month in Oregon and dealing with pushback from unions and consumer groups. Kroger is addressing other legal actions, too, including a ruling by the Colorado District Court, which scheduled a separate trial to begin on Sept. 30.
[RELATED: Kroger Pushes Back Against FTC’s Request for Preliminary Injunction]
As hurdles mount, so are the expenses associated with the deal. Bloomberg reported that the costs related to deal have exceeded $800 million.
In other merger-related news, Kroger announced this week that it is starting exchange offers and consent solicitations for Albertsons’ outstanding notes. That move, which also would remove some restrictions on Albertsons’ financial operations, is part of the merger process.
Meanwhile, legal maneuvers are being taken on the pro-merger side of the deal. Four state attorneys general in Ohio, Alabama, George and Iowa filed a brief in a federal court in Oregon this week declaring that the merger will help grocers compete in an increasingly tight market against mass, club and online retail players. They asserted that the FTC has too narrowly defined “supermarkets” and is excluding non-traditional grocery retailers like Costco, ALDI, Whole Foods and e-commerce sites. “The FTC’s tunnel vision in this case risks chilling the very competition that it seeks to protect,” said Ohio Attorney General Dave Yost. “A full view of the competitive landscape shows no reason to delay this deal further.”
Cincinnati-based Kroger is No. 4 on The PG 100, Progressive Grocer’s 2024 list of the top food and consumables retailers in North America. View company website. Boise, Idaho-based Albertsons is No. 9 on The PG 100. View company website. PG also named Kroger and Albertsons among the Retailers of the Century. Keene, N.H.-based C&S is No. 18 on PG’s list.
