Two major U.S. supermarkets, Kroger and Albertsons, have been in search of to mix forces after their boards reached a unanimous all-cash merger agreement, first announced in October 2022.
Nonetheless, the potential $24.6 billion deal has encountered one other roadblock, because the U.S. government requested a preliminary injunction to dam the merger. In response, Kroger CEO Rodney McMullen pledged to chop prices by $1 billion if the merger goes through.
“The day that we merge is the day that we are going to begin lowering prices,” McMullen said on Wednesday while testifying during a federal court hearing in Portland, Oregon.
McMullen also noted that the merger would allow the corporate to lower prices and higher compete with larger retailers like Walmart, Amazon, and Costco. If combined, Albertsons and Kroger would control around 13% of U.S. grocery sales, still lower than Walmart’s nearly 22% market share.
When asked if Kroger would raise prices after the merger, he replied, “Absolutely not. We imagine over time, value might be increasingly vital, and you’ll be able to’t price your items above the market.”
Kroger and Albertsons first proposed the merger in October 2022, after Kroger agreed to buy Albertsons. The Federal Trade Commission sued earlier this 12 months to dam the deal, alleging that the merger would eliminate competition and lift grocery prices amid already high food price inflation.
In his recent testimony, McMullen cited rising supplier costs, fuel prices, and bank card swipe fees when asked by the corporate’s lawyer why prices have increased.
In a press release on the time of the initial proposal, McMullen said, “Albertsons Cos. brings a complementary footprint and operates in several parts of the country with only a few or no Kroger stores. This merger advances our commitment to constructing a more equitable and sustainable food system by expanding our footprint into latest geographies to serve more of America with fresh and inexpensive food and accelerates our position as a more compelling alternative to larger and non-union competitors.”
Kroger also stated in its news release, “At a time when individuals are increasingly purchasing for groceries and eating at home, Kroger and Albertsons Cos. might be higher positioned to alleviate the inflationary pressures facing shoppers with a combined portfolio of roughly 34,000 total private label products across premium, natural and organic, and opening price point brands.”
