Albertsons (ACI) shares dropped during Monday's intraday trading as the supermarket giant Albertsons (KR) and Kroger agreed to sell additional stores to seek regulatory go-ahead for Kroger's $24.6 billion takeover of its competitor. A revised divestiture package was announced by the two corporations with C&S Wholesale Grocers. As per this agreement, C&S will buy another 160 locations, bringing the total to 579. Post the closure of Albertsons's buy by Kroger, C&S would inherit these stores.
This action followed two months after the Federal Trade Commission (FTC) sued to prevent the merger, branding the original contract with C&S as “inadequate”. The FTC criticized it as a “mishmash of unrelated stores, brands, signs, and other assets” that did less than adequate to lessen the adverse impact on competition from the proposed union of these two companies.
In their recent statement, Kroger stated that the addition of Albertsons “will bring about significant and tangible benefits" for their customers, associates, and communities. Both entities also “vowed to defend the merger in the court”.
Along with the news of divesture, Albertsons also published its Q4 financial statement, reporting an EPS of $0.54, surpassing the expectations. Although there was a marginal 0.4% rise in the revenue to $18.34 billion, it fell short of the projections.
CEO Vivek Sankaran said the company posted strong results “despite a challenging industry environment” and predicted that Albertsons would continue to be impacted by hurdles such as “higher associate wages and benefits, significant food inflation from previous year, reduced government aid to our customers, a decrease in COVID-related income, and a growing presence of our pharmacy and digital businesses, which realise lower margins.” On a positive note, he stated that these challenges would be partially counterbalanced by ongoing productivity initiatives in the first half of the year.
As of 10:40 a.m. ET Monday, Albertson's shares fell by 0.4% to $20.26 and had seen a nearly 12% drop this year. However, Kroger’s shares remained steady and were almost 24% higher in 2024.