Kroger-Albertsons merger goes kaput
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A federal court yesterday issued a preliminary injunction against the proposed merger of grocery giants Kroger and Albertsons.
Why it matters: The ruling, by Kroger's own admission, is certain to doom the merger.
Catch up quick: The $25 billion deal would have combined the country's second and fourth largest grocers by market share, with Kroger trailing only Walmart and Albertsons sitting behind Costco.
- Combined, the two companies would have employed more than 710,000 workers and operate nearly 5,000 stores, almost 4,000 pharmacies and over 2,000 fuel centers nationwide. Albertsons brands include Safeway and Kroger's include Fry's.
- The FTC sued to block the deal in February, and it also faced challenges from several state attorneys general, including Arizona's Kris Mayes.
What they're saying: "Had this merger gone forward, it could have harmed families by reducing choices, driving up prices, and eliminating jobs," Mayes said in a statement. "This decision helps ensure that residents won't face the potentially devastating impacts of such a consolidation."
Zoom in: Albertsons and Kroger combine for more than 40% of the market in the Valley and more than 44% statewide.
- Albertsons operates 134 stores across the state, while Kroger has 124, The Arizona Republic reported.
- Walmart and Costco, the companies' next largest competitors, have a combined market share of about 26% in Arizona.
The intrigue: In an attempt to appease regulators, Kroger agreed to sell 579 stores, including about 100 in Arizona, if the sale was approved.
- Now that the deal appears dead, those stores will likely remain under their current branding — at least for now.
What we're watching: Albertsons may find itself back on the auction block.
- A lawyer representing Albertsons previously said the company might have to pursue layoffs, store closures and exit entire markets.
- "And if somehow Albertsons does not succeed at those kinds of measures, the likelihood is it is a candidate for a sale to somebody else," she added.