The Kroger & Albertsons merger is still up in the air with a new FTC likely looming
It remains unclear whether grocery giant Kroger will complete its merger with Albertsons before the Trump administration takes hold of the Federal Trade Commission.
The FTC and lawyers in Washington state and Colorado have been in court over the proposed merger between Kroger and Albertsons since August. The grocers concluded their hearing on the government’s preliminary injunction to stop the $24.6 billion merger in September. Judges in Colorado, Washington state and on the federal level have yet to issue rulings on the Kroger and Albertsons cases.
The companies have pressed ahead with the proposed merger for more than two years, planning to divest 579 stores to C&S Wholesale Grocers in an effort to push the deal forward.
It’s unclear when that will happen in Colorado, and the judge in Washington state are expected to issue a ruling Nov. 15, according to The Denver Post. In a Nov. 6 news release announcing the extension of exchange offers and consent solicitations, Kroger said it expects the merger to close in the fourth quarter. The federal judge in Oregon overseeing the case did not give a timeline for her ruling after closing arguments in September.
“It could come any day now,” said Joe Feldman, senior managing director of Telsey Advisory Group, which tracks retail and consumer companies. He added that both companies are likely preparing for either outcome. “It’s like a coin flip, probably.”
This has all been happening during the U.S. presidential election, which resulted in Donald Trump beating Kamala Harris. The FTC’s lawsuit was brought by Lina Khan, who was appointed by President Biden and has been going after larger mergers. But the Trump administration is reportedly crafting a list of candidates to replace Khan and is expected to be more deal-friendly. Both Kroger’s and Albertsons’ shares soared since the election as investors anticipated the deal would face little resistance under Trump, CNN reported.
But with Biden set to step down, the pendulum could swing. Here’s what that may mean for the proposed merger.
Potentially smoother sailing under Trump
The election wouldn’t affect the FTC’s ruling itself. But if Kroger loses, an appeal could take place after the Trump administration takes office.
Under President Biden and the leadership of Commissioner Khan, the FTC has been aggressive against mergers. In general, Wall Street dealmakers and corporate executives expect M&A activity to ramp up under the incoming Trump administration. That could be good news for any similarly massive deals that arise in the future.
“I think the view is that under Trump, the regulatory regime will be much more relaxed,” said Neil Saunders of GlobalData Retail, another retail analyst. However, he doesn’t expect it to be smooth sailing for all deals. “Trump has his own peculiarities; he views some of tech as being very anti-Trump.”
End of an aggressive era
The Biden-era FTC has been known as particularly aggressive against deals involving consumer companies, though analysts note the Kroger-Albertsons deal would have likely been scrutinized under any administration because of its size and the importance of the grocery sector to the economy. Together, the companies own almost 5,000 locations across the U.S.
In October, the FTC blocked the planned $8.5 million merger between luxury brand owners Tapestry and Capri. In 2023, the FTC sued Amazon, alleging the e-commerce giant abuses its position in the marketplace to inflate prices, overcharge sellers and stifle competition.
Saunders said he believes Khan’s FTC “has been damaging for retailers and for U.S. business as a whole.” He added that he thinks the FTC’s case against Amazon — which is not set for trial until 2026 — was flawed as the definition doesn’t match how analysts or the media classify Amazon. The FTC argued Amazon suppresses rival other online superstores’ ability to compete for shoppers, defining “online superstore” as a site that offers “a single destination for shoppers to browse a large and diverse selection of goods from multiple brands across a wide range of categories.”
“Defining a market as the ‘online superstores’ market is just ludicrous,” Saunders said. “I mean, there’s no such market.” These efforts by Khan could be reversed by Trump’s FTC.
What comes next for Kroger and Albertsons
Dave Marcotte, an analyst for Kantar, said he expects Albertsons will still sell or come up with another resolution if the merger doesn’t work out. Albertsons’ share price has fallen more than 13% since the start of 2024, while Kroger’s has increased more than 30%. “Albertsons needs this deal,” he said. “It’s quite clear that their investors want to basically get out of the business and sell.”
Others have a different view.
Both Kroger and Albertsons have the potential to grow even if the merger fails, Feldman said. He said he sees Kroger as still a strong player in the grocery space and that at the current price, Albertsons’ stock is undervalued. Both are growing their digital presence, retail media and digital marketing, and he said he believes there are many operational improvements both companies can make to their stores.
“I think there’s a lot of good things that both companies can do to proceed as standalone organizations if that’s what ends up happening,” Feldman said.