US retailers Kroger and Albertsons announce $24.6 billion merger
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Supermarket chains Kroger and Albertsons, ranked second and third in the top 5 largest US retailers, announced on the signing of the merger agreement.
Under the terms of the deal, Kroger will buy all outstanding shares of Albertsons at a price of $34.1 per share. This is a price with a 32.8 percent premium to the value of Albertsons shares at the close of trading on October 12th. Thus, the total amount of the transaction is estimated at $24.6 billion, including Albertsons’ net debt of $4.7 billion. As part of the transaction, Albertsons will pay dividends to its shareholders in the total amount of $4 billion. Kroger, for its part, intends to reinvest about $500 million saved by cutting costs through the merger, into lower prices for consumers. In addition, the company intends to invest $1.3 billion in Albertsons. The deal has already been unanimously approved by the boards of directors of both companies.
The Kroger chain, founded in 1883, has more than 2,700 supermarkets, and the even longer operating Albertsons (founded in 1860) has more than 2,200 supermarkets. According to Euromonitor, which cites Reuters, Kroger occupies 8.1% of the US market, Albertsons – 4.8%. Walmart remains the market leader by a wide margin with a 25.2% share. Shares of both chains reacted to reports of a merger with a decrease of 5-7%.
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