M & A News: FTC Tries to Block Kroger’s (NYSE:KR) Merger with Albertsons
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M & A News: FTC Tries to Block Kroger’s (NYSE:KR) Merger with Albertsons

Story Highlights

Kroger and Albertsons’ planned merger runs afoul of the FTC, prompting mixed results for the pair.

The Federal Trade Commission (FTC) has kept itself busy over the last few years, seemingly throwing itself directly in the path of every merger deal and acquisition that’s emerged. One of the latest such deals would have seen grocery store chains Kroger (NYSE:KR) and Albertsons (NYSE:ACI) make a connection, but the FTC wasn’t having it and stepped in to block it. Kroger was down over 1.5% in the last minutes of Monday’s trading session, and Albertsons was up fractionally.

The deal—which would have been valued at $25 billion—was blocked because the FTC feared that the move would, somehow, raise grocery prices and lower wages for workers. Given that grocery prices have already been on an upward tear for the last five years, it’s hard to see how anyone would be able to tell the difference between merger-related price hikes and hikes caused by crippling inflation rates. Food prices, after all, are up 25% over what they were in 2019.

Necessary to Compete

Meanwhile, for their part, Kroger and Albertsons made clear the hill they’ll stand on throughout the lawsuit proceedings: a merger is vital in order for the duo to effectively compete against the huge array of other grocery stores and superstores out there, including long-time nemeses Walmart (NYSE:WMT) and Amazon (NASDAQ:AMZN), among others. A combined Kroger and Albertsons would hold about 13% of the market, whereas Walmart has 22% of the field. A combined effort certainly would have an edge in bulk purchasing, which should mean discounts for customers, which is vital in a market where prices are already soaring out of control.

Which Is the Better Buy, Kroger or Albertson’s?

Turning to Wall Street, ACI stock is the leader of the two, with a 14.19% upside thanks to a $24.58 average share price target for this Moderate Buy-rated stock. Meanwhile, KR stock, another Moderate Buy, can only offer a 7.87% upside potential against its $51.20 price target.



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