- Friday, Kroger Co KR agreed to purchase Albertson’s Companies Inc ACI for $34.10 per share for an enterprise value of approximately $24.6 billion build a national footprint.
- However, the US Federal Trade Commission (FTC) could challenge the deal in the face of increased antitrust scrutiny by the Biden administration.
- “There is a significant risk of a challenge,” said Andre Barlow of the law firm Doyle Barlow and Mazard PLLC. “This is the kind of deal the FTC wants to discourage.”
- To address the so-called concerns, the companies plan to divest some businesses, according to Reuters reportedand Albertsons is poised to spin off a standalone entity to its shareholders immediately prior to closing of the transaction, which is expected in early 2024. The newly listed company is estimated to have up to 375 stores.
- “We have a clear path to gain regulatory approval for divestitures,” the company’s executives assured investors on a conference call, adding that it’s too early to narrow down which markets the restructuring would take place in.
- Barlow said the FTC still had questions about who would operate the stores and whether they would have enough assets and purchasing power to compete effectively.
- Still, some analysts were optimistic that the plan to sell businesses would be enough.
- Kroger said it expects to reinvest about half a billion dollars in cost savings from deal synergies to drive down prices. In addition, $1.3 billion will be invested in Albertsons.
- “The merger will strengthen our position as a more compelling alternative to larger and non-unionized competitors,” the report quoted Rodney McMullen, Kroger’s chief executive officer.
- Kroger will have to pay Albertsons $600 million if the deal goes through.
- Price promotion: KR shares are up 0.79% to $43.50 during the premarket session on last Check Monday.
- Photo via company
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