Kroger to buy Albertsons in $24.6 bln deal

Kroger Co. KR, -5.69% has announced a $24.6 billion deal to buy Albertsons Cos. Inc. ACI, -7.72%. Under the terms of the merger agreement, Kroger will acquire all of the outstanding shares of Albertsons’ common and preferred stock for an estimated $34.10 per share. Bloomberg News reported, earlier this week that Kroger was in merger talks with the smaller grocer. The deal’s $24.6 billion value includes approximately $4.7 billion of Albertsons’ net debt. Kroger shares fell 3.05% before market open, while Albertsons’ stock was down 3.8%. The acquisition will establish a national footprint “to serve America with fresh, affordable food,” according to a statement released by the companies on Friday. Subject to the outcome of a store divestiture process, the cash component of the $34.10 per share price may be reduced by the per share value of a newly created standalone public company that Albertsons will spin off at the deal’s closing, the companies said. As part of the deal, Albertsons will pay a special cash dividend of up to $4 billion to its shareholders. Kroger shares have gained 2.9% this year, while Albertsons stock is down 3.9%, compared with the S&P 500 Index’s SPX, -1.69% decline of 23%.