Kroger announced it will acquire smaller rival Albertsons in a deal that will create a super-sized new grocery giant.
The combined company could have an annual revenue of more than $200 billion and about 5,000 stores, marking one of the biggest mergers in recent years in the retail space. Shares of Albertsons (ACI) soared nearly 12% on reports of the deal. Shares of Kroger (KR) were up over 1%.
The merger could provide the retailers with leverage in negotiations with consumer product makers such as Procter & Gamble and Unilever at a time of big price hikes. It would also help them compete with Walmart, which is the biggest seller of groceries in the U.S.
Some critics have said that the deal could lessen competition among grocery chains and possibly lead to higher prices for shoppers.
Kroger has more than 2,700 grocery stores, including regional chains like Fred Meyer and Ralph’s, and generated nearly $140 billion in sales last year. Albertsons runs nearly 2,300 supermarkets across the U.S. including Safeway and Vons, and reported $72 billion in sales.
Shares of Albertsons are down about 2.4% so far this year, while shares of Kroger are up 3%.