Kroger and Albertsons are spending billions on stock buybacks after their blocked merger
The grocery store operators had said they’d be able to cut prices by combining, but regulators and a judge disagreed. Now they’re investing moves to reward shareholders.
Within a day of their $25 billion merger’s falling apart in court, Kroger and Albertsons were each planning to move forward with share repurchases to boost their stock prices and reward investors.
America’s two largest grocery store operators had argued that they’d be better able to lower prices for shoppers by joining forces. Doing so, they said, would boost their negotiating power with suppliers and make it easier to take on much bigger retailers that compete with them in grocery sales, such as Walmart, Costco and Amazon.
The Biden administration disagreed, with the Federal Trade Commission saying in a lawsuit countering the merger that the deal threatened to drive down workers’ wages and bargaining power and reduce industry competition, potentially pushing food prices higher.
With the deal now dead, it’s impossible to know whether any of that would have happened. But U.S. District Judge Adrienne Nelson of Oregon sounded a note of skepticism, writing in her decision Tuesday that the chains’ promises to invest in lower prices were “neither merger-specific nor verifiable, so there is no guarantee” that shoppers would benefit.
“The promise to make a price investment is not legally binding, and the Court must give limited weight to a non-binding promise made during these proceedings,” she said. A Superior Court judge in Seattle agreed with Nelson’s ruling and issued an injunction against the merger Tuesday. On Wednesday, Albertsons terminated the deal and sued Kroger, alleging its erstwhile partner didn’t do enough to secure regulators’ blessing.
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