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Three lessons from recent merger between Albertsons and Kroger

On Behalf of | Oct 24, 2022 | Mergers And Acquisitions |

The Kroger Albertsons merger will result in a grocery store super giant with an estimated market value of over $47 billion. Kroger, one of our country’s largest grocery store chains has acquired various competitors in recent years including Ralphs and Mariano’s. The store came into the deal with a market value of $33 billion while Albertsons has also bought out competitors like Jewel-Osco and merged with Safeway and had a market value of approximately $14 billion at the time of the merger.

Why would two super giants merge?

The companies are two highly clearly successful stores on their own — so why merge? A merger can come with some risk, but it is being reported that the two super giants may have chosen to move forward with this merger to help insulate themselves from the impact of inflation.

What can other businesses learn from this merger?

The two companies are experienced in these types of transactions and took steps to help better ensure a smooth transition to business post-merger. These steps can prove fruitful for any merger and acquisition deal and include the following.

  • Cultural alignment. Two very different workplace cultures can lead to serious hurdles after an M&A deal. In its announcement to acquire Albertsons, Kroger stated that the two grocers have similar cultures and “shared values” that should ease the transition. Due diligence prior to completion of a deal to check on the culture and develop a plan to ease the transition, if needed, is wise.
  • Increase market share. The move will result in a larger footprint, with the combined grocer having a presence in forty-eight states and the District of Columbia.
  • Strengthen technology. The announcement also points out that the merger provides the ability to strengthen their technology and innovation efforts to lead to a more seamless experience for their customers.
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