Kroger Now Plans To Cut Grocery Prices By $1 Bln Upon Albertsons Merger

(RTTNews) - Supermarket chain Kroger Co., amid the ongoing regulatory hurdles in its proposed $25 billion merger with Albertsons Cos., now plans to cut grocery prices by $1 billion, upon the closure of the deal, Bloomberg reported.

This is double the $500 million cut in prices the company announced, while the merger deal was revealed in 2022. The supermarkets also plan to spend $1 billion to increase worker wages and benefits and $1.3 billion on improving Albertsons stores.

The move to support customers with savings in grocery prices comes as the United States is facing the highest inflation in years. Recently, US Vice President Kamala Harris called for a federal ban on food and grocery price gouging.

It was in October 2022 that the grocery operator, which owns chains including Ralphs and Dillons among others, agreed to acquire its smaller rival Albertsons to compete with companies like Amazon.com Inc. and Walmart Inc.

Kroger expected the deal to accelerate its go-to-market strategy and to position the combined company as a premier omnichannel food retailer reaching around 85 million households. As per the merger statement, the combined company then employed more than 710,000 associates and operated a total of 4,996 stores, 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies, and 2,015 fuel centers across 48 states and the District of Columbia, generating more than $200 billion in annual sales.

Kroger and Albertsons also agreed then to make hundreds of store divestitures so as to obtain the required regulatory clearance necessary to consummate the deal.

The transaction was expected to close in early 2024, subject to the receipt of required regulatory clearance and other customary closing conditions.

Meanwhile, the companies since their merger announcement had been facing various setbacks, including opposition from politicions and unions with lawsuits, which claimed that such a deal would result in higher grocery prices, severely limit grocery store options, lower wages as well as eliminate vital competition among the stores.

Washington Attorney General Bob Ferguson in January filed a lawsuit to block the proposed largest retail grocery merger in the U.S. history, claiming that it would raise prices and eventually harm the state's customers and workers.

In late July, Reuters reported that the proposed merger has been halted until the Colorado District Court ruling on a lawsuit filed to block the deal, which is set to begin on September 30.

In January this year, the companies said they were in active and ongoing dialogue with the Federal Trade Commission and individual state Attorneys General regarding its proposed merger and divestiture plan, and that they expected to complete the deal in the first half of 2024.

As per reports, Kroger had made similar moves with its earlier acquisitions. In 2015, after acquiring Roundy's, Kroger spent more than $100 million to cut the prices of thousands of products. Further, after purchasing Harris Teeter, the company invested $125 million in lowering prices.