Posted originally on the conservative tree house on October 14, 2022 | Sundance
Not that long ago, I would have said to allow the free market to decide if a merger or acquisition was valuable for the consumer. However, in the era where massive multinational corporations, investment groups and financial institutions have now used corporatism to merge their interests with government, the massive multinationals need scrutiny.
Two major food retailers, Kroger and Albertsons, have announced their intent to merge into one massive company in a deal valued at $24.6 billion. The majority stakeholders in Kroger are institutional investors Vanguard ($3.72 billion/11.29%) and Blackrock ($3.02 billion/ 9.17%). The majority stakeholder in Albertsons is institutional investment group Cerberus ($3.90 billion/28.54%).
In the past few years, food has surfaced as a growing national security issue. Foreign companies and large multinationals continue to expand their control over U.S. farm production and export U.S. farm products (Big Ag). A major retail level move like the merger of Kroger and Albertsons creates a weaker competitive environment and gives a larger potential footprint to price control.
CBS – […] Together, the companies will have more than 710,000 workers and operate nearly 5,000 stores, along with roughly 4,000 pharmacies. Kroger, based in Cincinnati, Ohio, operates 2,800 stores in 35 states, including brands like Ralphs, Smith’s and Harris Teeter. Alberstons, based in Boise, Idaho, operates 2,220 stores in 34 states, including brands like Safeway, Jewel Osco and Shaw’s.
“Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores,” Kroger CEO Rodney McMullen, who will lead the expanded company, said in a statement.
Kroger will pay $34.10 for each share of Albertsons stock, a 19% premium from the closing price on Thursday. As part of the purchase, Albertsons will issue a cash dividend of up to $4 billion to its shareholders, which the companies said is expected to be about $6.85 per share. (read more)
Sometimes bigger is just bigger and more controlling, not better.
That said, with economic volitivity continuing to increase, the food sector is a safe harbor for massive investment shifts.