These statements are based on the assumptions and beliefs of Kroger and Albertsons Companies management in light of the information currently available to them. But the biggest winners in the $24.6 billion deal may be the private-equity giant Cerberus and a group of investors. The merger is also still being challenged by union leaders from the United Food and Commercial Workers, notes Seeking Alpha. For years, the grocery store industry had low growth yet was intensely competitive, with Walmart, Target, Costco and others increasingly elbowing their way into food shoppers carts. 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. Supporting and investing in our associates is foundational to both of our organizations and will continue to be a critical pillar of our success. 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. No further action by Albertsons Cos.' shareholders will be needed or solicited in connection with the merger. Under the terms of the merger agreement, which has been unanimously approved by the board of directors of each company, Kroger will acquire all of the outstanding shares of Albertsons Companies, Inc. ("Albertsons Cos.") common and preferred stock (on an as converted basis) for an estimated total consideration of $34.10 per share, implying a total enterprise value of approximately $24.6 billion, including the assumption of approximately $4.7 billion of Albertsons Cos. net debt. Together with Kroger, our combined iconic banners will be able to provide customers with even more value and greater access to fresh food and essential pharmacy services. Supporting and investing in our associates is foundational to both of our organizations and will continue to be a critical pillar of our success. ET. Albertsons said in a statement that it had grown tremendously with the help of our sponsors and other investors. It added that it had spent billions of dollars to modernize its stores and build digital and technology platforms, as well as to improve associate wages, benefits and training programs. Opinions expressed by Forbes Contributors are their own. Albertsons Cos. shareholders holding more than a majority of Albertsons Cos.' common stock have either delivered a written consent or committed to delivering a written consent approving the transaction no later than October 18, 2022 and Albertsons Cos. shareholders holding more than a majority of Albertsons Cos.' preferred stock have already approved the transaction. About a year later, more stores were added when the group contributed $1.25 billion to acquire more than 1,300 stores from Safeway. three companies, which together would represent more than half of the sector by revenue. Neither Kroger nor Albertsons Companies assumes the obligation to update the information contained herein unless required by applicable law. Kroger Chairman and CEO Rodney McMullen says the deal brings together two purpose-driven organizations to deliver superior value to customers, associates, communities and shareholders. It could be part of a consolidation wave as companies continue to grow by merger. The merger of Kroger and Albertsons would put control of the grocery industry into the hands of [+] three companies, which together would represent more than half of the sector by revenue. At closing, the Company plans to fund the transaction using a combination of cash on hand and proceeds from new debt financing. The forward-looking statements by Kroger and Albertsons Companies included in this press release speak only as of the date the statements were made. Kroger and Albertsons each already control multiple retail brands, creating the illusion of a large number of independent players. Kroger, which owns City Market, announced plans to acquire Albertsons, which owns Safeway, for nearly $25 billion last October. The proposed merger of Kroger and Albertsons would combine about 50 store chains under a single company. National Leader, Food & Beverage Services Group, Marcum. A lot, actually. The powerful union is worried about lost jobs for their members in the event regulators mandate the sale of hundreds of supermarkets. Consumer advocates speculated that the merging of the two supermarket giants would lead to increased prices in a time of already rampant food inflation, and democratic party senators Bernie Sanders and Elizabeth Warren both publicly backed the blocking of the acquisition by federal regulators, according to CNN Business. There could be another bright side for smaller players facing big competitors. "This transaction with Kroger provides substantial value to shareholders and exciting opportunities for associates to be part of a combined organization with the ability to better support the lives and health of millions of Americans. At a time when consumers are already withering under high food prices, consumer advocates argue that the deal would wipe out any meaningful competition in numerous cities and communities and ultimately lead to consumers paying more. "Kroger and Albertsons Cos. have strong track records of providing quality products at great value. Kroger-Albertsons Merger Faces Long Road Before Approval "Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores. Robert Ohmes of Bank of America Importantly, the merger secures union jobs and we will continue to work with local unions across America to serve our communities. This is a BETA experience. The new entity would mean some competitors stores might close, as more local grocers are driven out of business, Mitchell said. That is especially true of supermarket giant Kroger 's proposed purchase of rival Albertsons. As a combined company, we will build on our similar values to create a culture that embraces diversity, equity and inclusion and fosters a best-in-class associate experience by enabling, supporting and empowering our associates to unlock their full potential. Kroger-Albertsons merger worries for Kraft, Mondelez on Crain's Daily or Walmart, which control only a few brands. There's a big problem with the Kroger-Albertsons supermarket merger The ability of Kroger and Albertsons Companies to achieve the goals for the proposed transaction may also be affected by their ability to manage the factors identified above. The ability of Kroger and Albertsons Companies to achieve the goals for the proposed transaction may also be affected by their ability to manage the factors identified above. Kroger And Albertson's Should Merge Now To Compete With - Forbes Anyone can read what you share. An on-demand replay of the webcast will be available at approximately 1:00 p.m. "We are bringing together two purpose-driven organizations to deliver superior value to customers, associates, communities and shareholders," said Rodney McMullen, Kroger Chairman and Chief Executive Officer, who will continue serving as Chairman and CEO of the combined company. Albertsons Companies is committed to helping people across the country live better lives by making a meaningful difference, neighborhood by neighborhood. When completed, the information statement will be mailed to Albertsons Companies' stockholders. We are, across our family of companies, nearly half a million associates who serve over 11 million customers daily through a seamless shopping experience under a variety of banner names. That could occur in California, Texas, Washington, D.C. and/or Phoenix, among others. Consistent with prior transactions, Kroger plans to invest in lowering prices for customers and expects to reinvest approximately half a billion dollars of cost savings from synergies to reduce prices for customers. It has also supported the retirement savings of individuals, universities, nonprofits and others who have entrusted us as a fiduciary.. Kroger and Albertsons merger: What lies ahead? The combined company could. Other complicating factors include possible legal actions and the fact that the two supermarket chains are largely unionized, per CNN. This included Cerberus, a private equity firm that is a major shareholder in Albertsons and stands to see substantial payouts through dividends and even more substantial payouts if the merger eventually goes through. Kroger buys Albertsons in massive supermarket merger, what it means for 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. 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. The worlds biggest retailer may be looking over its shoulder soon. ET on October 14, 2022. We look forward to working together with Kroger to capture the compelling opportunities ahead. 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. Kroger and Albertsons Companies Announce Definitive Merger Agreement October 14, 2022 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 As part of the transaction, Albertsons Cos. will pay a special cash dividend of up to $4 billion to its shareholders. As part of the transaction, Albertsons Cos. will pay a special cash dividend of up to $4 billion to its shareholders. are planning a merger that would create a superstore second in scale only to Walmart The two grocery store chains and investment firms involved insist the deal isnt about a payday for investors. As part of the $9 billion deal, Albertsons sold the stores to a smaller grocery chain, Haggen, which previously had less than 20 stores. In 2021, along with the Albertsons Companies Foundation, the Company contributed nearly $200 million in food and financial support, including approximately $40 million through our Nourishing Neighbors Program to ensure those living in our communities have enough to eat. Kroger and Albertsons Companies Announce Definitive Merger Agreement 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.
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