Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

Albertsons, Kroger CEOs defend $25 billion merger to U.S. Senate committee

Stock Markets Nov 29, 2022 07:17PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Traders work as screens display the trading information for Kroger Co and Albertsons Cos Inc. on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 14, 2022. REUTERS/Brendan McDermid/File Photo
 
WMT
-1.33%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
KR
-1.22%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Diane Bartz

WASHINGTON (Reuters) - Skeptical lawmakers from across the political spectrum questioned executives at grocers Kroger (NYSE:KR) Co and Albertsons Companies Inc on Tuesday about their planned $25 billion merger amid concerns the tie-up could boost already-high food prices.

Senator Amy Klobuchar, a Democrat and chair of the Senate Judiciary Committee's antitrust subcommittee, said she worried the deal would mean a loss of competition in groceries, and potentially higher costs, at a time when inflation is already high.

"That's why you've heard concern across the country about this transaction," she said. The deal will be reviewed by the Federal Trade Commission to ensure it is legal under antitrust law.

Kroger Chief Executive Rodney McMullen sought to allay lawmakers' worries about the planned purchase of a big rival, noting that the merged firms would still be much smaller than Walmart (NYSE:WMT) Inc, the country's top grocer. "The combined company will remain at number four," he said.

Stores under the Albertsons umbrella include Balducci's, Haggen, Kings, Safeway, Star Market, Tom Thumb, United Supermarkets and Vons, among others. Kroger owns Baker's, Dillons, Fred Meyer, King Soopers, Mariano's, Pick'n Save and Ralphs.

Klobuchar and Senator Mike Lee, the top Republican on the panel, both pointed to Albertsons' 2015 purchase of Safeway as a cautionary tale.

In that case, the companies were forced to sell 168 stores to ensure that competition would remain fierce and prices would not rise. The divestiture failed, and Albertsons bought back dozens of stores.

The companies, knowing this new tie-up would be controversial and that antitrust enforcement has become tougher, offered an aggressive plan aimed at resolving concerns when they announced the deal, which would bring nearly 5,000 stores under one corporate umbrella. The grocers said they expected to sell between 100 and 375 stores ideally to outside buyers but could also put them into a new company that would be owned by Albertsons' shareholders. UBS has said it believes the plan will satisfy antitrust enforcers. This plan could force the FTC to not only prove in court that the transaction is illegal but that the proposed remedy is inadequate.

Kroger's deal to buy Albertsons has also been criticized by unions and progressive groups, which have argued that the merger would exacerbate income inequality through job losses and eroding wages and have urged the government to block the deal.

The merger is being discussed at a time when the Biden administration is determined to bring down inflation. U.S. consumer prices rose less than expected in October, pushing the annual increase below 8% for the first time in eight months. Food prices increased 0.6%.

The companies have also been criticized for a plan to give Albertsons' shareholders a $4 billion dividend payment. A Washington state court put that plan on hold with the next hearing set for Dec. 9. Separately, the attorneys general of Washington, D.C.; California and Illinois have also sued to stop that payment, arguing it would weaken the company's ability to compete.

Senator Tom Cotton, a conservative Republican, criticized Kroger for the company's aprons with a design that appeared to support gay pride. Two employees were fired for refusing to wear the apron.

Cotton referred to a dynamic in congressional hearings where conservative lawmakers are more likely to defend corporations, saying that companies that "discriminate" against conservatives "probably shouldn't ask Republican senators to come and carry the water for them whenever our Democratic friends want to regulate them."

Albertsons, Kroger CEOs defend $25 billion merger to U.S. Senate committee
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email