Kroger and Albertsons, two of the largest supermarket chains in the U.S., have been looking to join forces after the boards of directors of both companies unanimously reached an all-cash merger agreement that was first announced in October 2022.
But the $24.6 billion deal hit a new roadblock after the U.S. government requested a preliminary injunction to block the merger. Rodney McMullen It promised to shave $1 billion off the price if the merger goes through.
“The day of the merger is the day we start lowering prices,” McMullen testified Wednesday at a federal court hearing in Portland, Oregon.
McMullen also said the merger would allow the company to lower prices and better compete with larger retailers such as Walmart, Amazon and Costco. Combined, Albertsons and Kroger would control about 13% of U.S. grocery sales, still behind Walmart’s market share of about 22%.
Asked if Kroger would raise prices after the merger, he said: “Absolutely not. We believe that value becomes more and more important over time and that we can’t offer products at above market price.”
Kroger and Albertsons first proposed a merger in October 2022 after Kroger agreed to acquire Albertsons. The Federal Trade Commission filed suit earlier this year to block the deal, arguing the merger would eliminate competition and increase grocery prices amid already high food price inflation.
Asked by the company’s lawyers in recent testimony why prices had increased, McMullen cited rising supplier costs, fuel prices and credit card fees.
“Albertsons brings a complementary footprint, operating in several areas of the country where Kroger has few or no stores. This merger will expand our footprint into new regions and advance our efforts to build a more equitable and sustainable food system by providing fresh, affordable food to more Americans, accelerating our position as a more attractive alternative to larger, non-union competitors,” McMullen said in a statement at the time of the original proposal.
“With a combined offering of approximately 34,000 private-brand products, including premium, natural, organic and entry-level brands, Kroger and Albertsons will be well-positioned to help mitigate the inflationary pressures facing shoppers at a time when more grocery shopping and meals are being done at home,” Kroger said in a news release.