Two of the country’s supermarket giants, operating thousands of stores under various brand names, have agreed to merge with a pledge to lower consumer prices.
Albertsons Companies, which operates one of El Paso’s major supermarket chains, has agreed to be acquired by The Kroger Co. for $24.6 billion, the companies announced Friday.
The combined companies would have more than 4,600 stores after spinning off up to 375 stores into a separate company. The two companies employ more than 700,000 people.
The sale is expected to be completed in early 2024, pending regulatory approvals.
Until then, Albertsons stores will operate as usual, a company spokesperson reported in an email.
Albertsons has eight supermarkets in El Paso and has another in the works in the Horizon City area. It also operates three stores in nearby Las Cruces.
Kroger, which operates just over 200 stores in Texas, has no supermarkets in the El Paso-Las Cruces area.
“Given the similarities in the culture and values at Kroger and Albertsons Cos., I am confident that the combination will also have a positive impact on our associates and the communities we are proud to serve,” Vivek Sankaran, CEO of Albertsons Cos., said in a statement.
Rodney McMullen, Kroger CEO and board chairman will run the combined companies.
The merger of the two supermarket giants would have combined sales of nearly $210 billion – about $10 billion short of US food sales for Walmart, the world’s largest grocer, the Cincinnati Enquirer reported.
Walmart is El Paso’s largest supermarket operator, followed by Food King, a small, Texas-based chain, and then Albertsons.
The combined companies would control around 13% of the US grocery market ― still a distant second to Walmart’s 22% share, The Associated Press reported.
To lessen regulators’ anti-trust concerns, the companies plan to spin off 100 to 375 stores into a separate supermarket company owned by Albertsons Companies’ shareholders. Kroger and Albertson’s officials plan to work together to identify which stores will be put into the new company.
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Kroger plans to reinvest about $500 million of expected savings from the merger into reducing prices of products to customers, Kroger officials reported in the merger press release.
One way the merged companies can offer lower-priced products is through its combined portfolio of 34,000 private-label products, Kroger officials said.
Kroger also plans to invest $1.3 billion for improvements in Albertsons Companies’ stores, officials reported.
It also plans to invest $1 billion to continue raising wages and fringe benefits for employees, Kroger officials said.
“This merger advances our commitment to build a more equitable and sustainable food system by expanding our footprint into new geographies to serve more of America with fresh and affordable food and accelerates our position as a more compelling alternative to larger and non-union competitors,” Kroger’s McMullen said in a statement.
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Boise, Idaho-based Albertsons Companies has 2,273 stores under 24 different brands, including Albertsons, Safeway, and Jewel-Osco, in 34 states and Washington, DC It employs about 290,000 people.
The Albertsons brand has 387 stores in 15 states.
Cincinnati-based Kroger has 2,721 stores under various brands in 35 states and Washington, DC, including King Soopers in Colorado. It has about 420,000 employees.
Albertsons Companies had sales of almost $72 billion in 2021 and a profit of $1.62 billion.
Kroger had almost $138 billion in sales and a profit of nearly $1.7 billion in 2021.
Vic Kolenc may be reached at 546-6421; [email protected]; @vickolenc on Twitter.