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A reconciliation to historical non-GAAP figures is provided in the Appendix below. Kroger will host a conference call to discuss the transaction tomorrow, October 14, 2022 at 8:30 a.m. These statements are based on the assumptions and beliefs of Kroger and Albertsons Companies management in light of the information currently available to them. The unavailable information could have a significant impact on Kroger's and Albertsons Companies' GAAP financial results. But that value will decrease by $6.85 a share when the $4 billion dividend to all shareholders is paid and could decline further if, in order to receive regulatory approval, hundreds of stores are placed in a new company that would be owned by Albertsons shareholders, including the private-equity firms. Its only natural for them to want to seek an exit., Kroger-Albertsons Merger Faces Long Road Before Approval, https://www.nytimes.com/2023/01/23/business/kroger-albertsons-merger.html. Rachel Shemirani of Barons Market believes that customers will search for that sense of community elsewhere. Shemirani believes customer service will be king, with flexibility, heart and passion at independent grocery stores. The merger is also still being challenged by union leaders from the United Food and Commercial Workers, notes Seeking Alpha. Kroger and Albertsons merger: What lies ahead? The companies said they plan to continue with their shared track record to lower prices, enhance customer experience and increase associate wages and benefits. How big beyond store count will the new multi-billion-dollar company be in this food fight? I believe this merger is the beginning of a trend and that we could see more consolidation, according to Ken Fenyo, of Coresight Research. Many of these stores operate in small-town markets and belong to families that manage them. Kroger plans to buy Albertsons in a deal valued at $24.6 billion, a merger that would combine the two largest grocery-store chains in the U.S., the companies said on Friday. and Albertsons The grocery giants Albertsons Companies and Kroger are in talks to combine in a deal that could be announced as soon as Friday, four people with knowledge of the plans said. Kroger-Albertsons likely would close or divest of some of its own overlapping stores, possibly in response to anti-trust regulations. Kroger expects to continue to have a solid balance sheet supported by strong free cash flow of the combined business. are planning a merger that would create a superstore second in scale only to Walmart 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. There's a big problem with the Kroger-Albertsons supermarket merger A Look Into Why The Kroger-Albertsons Merger Hasn't Happened Yet. If a merger does . If the merger ultimately goes through, Kroger would control approximately 5,000 supermarkets nationwide, including Albertsons' subsidiaries such as Safeway and Ralphs. Goldman Sachs & Co. LLC and Credit Suisse are serving as financial advisors and Jenner & Block LLP is serving as corporate legal counsel and White & Case LLP and Debevoise & Plimpton LLP are serving as antitrust legal counsel to Albertsons Cos. At The Kroger Co. (NYSE: KR), we are Fresh for Everyone and dedicated to our Purpose: To Feed the Human Spirit. Net earnings attributable to The Kroger Co. We look forward to working together with Kroger to capture the compelling opportunities ahead. Kroger has engaged with the rating agencies and is strongly committed to an investment grade credit rating. We'll also be able to further enhance technology and innovation, promote healthier lifestyles, extend our health care and pharmacy network and grow our alternative profit businesses. The Kroger and Albertsons Merger Must Be Stopped Net earnings attributable to The Kroger Co. Size could lead to efficiency and possibly lower prices due to bargaining power, benefiting consumers. T&T Supermarkets. Smaller and bigger stores both can have a lot to offer. Is my livelihood going to go away? asked Kyong Barry, 60, a front-end manager at a Safeway in Auburn, Wash. She is a member of the United Food and Commercial Workers International Union, which has 350,000 members working in stores owned by Kroger and Albertsons. Our merger with Albertsons provides meaningful, measurable benefits to Americas consumers, associates of both companies and the communities we serve, Kroger said in a statement. No further action by Albertsons Cos.' shareholders will be needed or solicited in connection with the merger. Steven Peterson. In October, Kroger . The deal would go beyond food to include healthcare. These include the specific risk factors identified in "Risk Factors" in each of Kroger's and Albertsons Companies' annual report on Form 10-K for the last fiscal year and any subsequent filings, as well as the following: the expected timing and likelihood of completion of the proposed transaction, including the timing, receipt and terms and conditions of any required governmental and regulatory clearance of the proposed transaction; the impact and terms and conditions of any potential divestitures and/or the separation of SpinCo; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; the outcome of any legal proceedings that may be instituted against the parties and others following announcement of the merger agreement and proposed transaction; the inability to consummate the proposed transaction due to the failure to satisfy other conditions to complete the proposed transaction; risks that the proposed transaction disrupts current plans and operations of Kroger and Albertsons Companies; the ability to identify and recognize the anticipated benefits of the proposed transaction, including anticipated TSR, revenue and EBITDA expectations and synergies; the amount of the costs, fees, expenses and charges related to the proposed transaction; and the ability of Kroger and Albertsons Companies to successfully integrate their businesses and related operations; the ability of Kroger to maintain an investment grade credit rating; risks related to the potential impact of general economic, political and market factors on the companies or the proposed transaction. Importantly, the merger secures union jobs and we will continue to work with local unions across America to serve our communities. 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. Today's announcement is a testament to their success," said Vivek Sankaran, CEO of Albertsons Cos. "At Albertsons Cos., we are guided by an ambition to create customers for life. The legal challenge to the dividend was the first in what is likely to be a long and arduous process for Kroger and Albertsons, and theirplanto create a behemoth with $200 billion in annual revenues and 5,000 stores across the countryoperating under well-known chains like Safeway, Ralphs and Vons. Most recently, T&T opened a 40,000-square-foot store at the Willowbrook Shopping Centre in Langley, B.C. So what still has to happen for the merger to be completed, as planned, in 2024? We look forward to working together with Kroger to capture the compelling opportunities ahead. As part of the $9 billion deal, Albertsons sold the stores to a smaller grocery chain, Haggen, which previously had less than 20 stores. Albertsons announced the. Supporting and investing in our associates is foundational to both of our organizations and will continue to be a critical pillar of our success. What would a Kroger-Albertsons merger mean for grocery prices? Publix is a huge player in the South, and Grocery Outlet is big in the West. The Cincinnati-based company is the second-largest grocer by market share in the United States, behind. You may obtain copies of all documents filed by Albertsons Companies with the SEC regarding this transaction, free of charge, at the SEC's website, www.sec.gov or from Albertsons Companies's website www.albertsonscompanies.com/investors. CINCINNATI and BOISE,Idaho, Oct. 14, 2022 /PRNewswire/ -- Kroger (NYSE: KR) and Albertsons Companies, Inc. (NYSE: ACI) today announced that they have entered into a definitive agreement under which the companies will merge two complementary organizations with iconic brands and deep roots in their local communities to establish a national footprint and unite around Kroger's Purpose to Feed the Human Spirit. Here's a look at the number of stores Kroger and Albertsons each operate in those markets as of July 2022. You may obtain copies of all documents filed by Albertsons Companies with the SEC regarding this transaction, free of charge, at the SEC's website, www.sec.gov or from Albertsons Companies's website www.albertsonscompanies.com/investors. Mitchell said the new entity would have more clout in dealing with farmers, food workers and local grocers. Subject to the outcome of a store divestiture process, the cash component of the $34.10 per share consideration may be reduced by the per share value of a newly created standalone public company ("SpinCo") that Albertsons Cos. is prepared to spin off at closing in conjunction with the regulatory clearance process described further in the Transaction Details below. Kroger-Albertsons mega-merger could cause more US food deserts, experts However, as The New York Times noted at the time of the initial announcement, the deal is by no means a certainty, even if it's okayed by regulators. Washington Analysis, a research firm in Washington, D.C., that focuses on political and regulatory policy, put the odds of the merger successfully closing at 35 percent. The establishment of SpinCo, which is estimated to comprise between 100 and 375 stores, would create a new, agile competitor with quality stores, experienced management, operational flexibility, a strong balance sheet, and focused allocation of capital and resources to provide customers with continued value and quality service and associates with ongoing compelling career opportunities. Kroger will host a conference call to discuss the transaction tomorrow, October 14, 2022 at 8:30 a.m. The new entity reportedly would be the fifth-largest retail pharmacy chain in the nation, with nearly 4,000 pharmacies. The transaction is expected to advance Kroger's strategy of Leading with Fresh, Accelerating with Digital and will enable the combined company to build on Kroger's go-to-market strategy that includes Fresh, Our Brands, Personalization and Seamless. In other instances, the debt piled on the company for the buyout overwhelms it, as was the case in 2016 and again in 2020 when the New York grocery chain Fairway Markets filed for bankruptcy. "This combination will expand customer reach and improve proximity to deliver fresh and affordable food to approximately 85 million households with a premier omnichannel experience.". KR Kroger That is on top of the $1.5 billion in profits theyve already made and the $3 billion from their share of the dividend when it is paid. While Kroger-Albertsons would be a big deal, it would be very different from either Amazon This potential divestiture is what most complicates the merger's chances of success moving forward, since, as The New York Times notes, it's unknown how many stores may have to be divested and what that could do to stock prices. The transaction is expected to close in early 2024, subject to required regulatory clearance and closing conditions, according to the company's investor relations site. There could be another bright side for smaller players facing big competitors. They have already made big profits in their long-term investment in Albertsons and hope to make billions of dollars more through the merger. Opposition to Albertsons-Kroger merger continues The Kroger-Albertsons mega-merger would create a company with about 5,000 U.S. stores, a close second to Walmart's 5,335 in the United States. EBITDA Reconciliations1. And even independent grocery store chains are fretting about the merger, saying it will result in higher food prices and make the already competitive landscape more difficult. Kroger and Albertsons together in fiscal 21 racked up $210 billion in revenue and $3.3 billion in net earnings, according to Supermarket News. Numerator.com found that Albertsons e-commerce share nearly tripled for the 12 months ended September 30. Neither Kroger nor Albertsons Companies assumes the obligation to update the information contained herein unless required by applicable law. 1 Based on combined results for each company's most recent fiscal year, respectively. This cash dividend will be payable on November 7, 2022, to shareholders of record as of the close of business on October 24, 2022. Adjustment for pension plan withdrawal liabilities, Adjustment for company-sponsored pension plan settlement charges, Adjustment for loss (gain) on investments, Adjustment for Home Chef contingent consideration, (Gain) loss on interest rate and commodity hedges, net, Gain on property dispositions and impairment losses, net, Government-mandated incremental COVID-19 pandemic related pay5, Amortization of debt discount and deferred financing costs, Amortization of intangible assets resulting from acquisitions, Combined Plan and UFCW National Fund withdrawal6, Tax impact of adjustments to Adjusted net income. Corporate buyout specialists generally raise money from big investors, like pension funds for state employees, teachers, police officers and firefighters, and then buy undervalued or underappreciated companies. Establishes National Footprint to Serve America with Fresh, Affordable Food for Everyone, Combines Two Companies with Shared Values to Unite Around Kroger's Purpose to Feed the Human Spirit, Accelerates Kroger's Go-to-Market Strategy and Positions Combined Company as a Premier Omnichannel Food Retailer, As part of the transaction, Albertsons Cos. will pay a special cash dividend of up to $4 billion to its shareholders. ", "Today's announcement marks the successful outcome of the Board-led review of strategic alternatives Albertsons Cos. announced in February," said Chan Galbato, Co-Chair of the Albertsons Cos. Board of Directors and Chief Executive Officer of Cerberus Operations. Arun Sundaram of CFRA Research expects Albertsons to divest 100 to 375 overlapping store locations. We are committed to creating #ZeroHungerZeroWaste communities by 2025. As consumers worked from home and ate fewer meals at restaurants, grocery store profits soared. Supporting and investing in our associates is foundational to both of our organizations and will continue to be a critical pillar of our success. 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.". That could lead to some small store closings and some huge players getting even bigger. So what does the deal mean for the F&B industry, the two companies, competitors, suppliers, and consumers? Albertsons went public in the early months of the pandemic, but its offering was lackluster. Related: U.S. Senate to put Kroger-Albertsons merger under microscope Based on fiscal 2021 data, Kroger and Albertsons combined generated about $210 billion in revenue, $3.3 billion in net . Grocery Giants Kroger and Albertsons Are Said to Be in Merger Talks The combination creates a premier seamless ecosystem across 48 states and the District of Columbia, providing customers with a best-in-class shopping experience across both stores and digital channels. Although Kroger and Albertson's are the largest grocery-only companies in the country, they are falling behind in online, the key change happening to the industry.
