KR ACI merger food for thought

Happened to run across an article this weekend announcing the merger between KR and ACI. Not sure how this really works for either but what I do know is this creates a monsterous competitor in the grocery market to WMT and COST.

KR and ACI are both stand alone grocers thought this was interesting in the fact that fridays retail sales numbers showed a decline in almost everything other than grocery. These two are the number 1 and 2 only grocery stores in the country and will likely face large antitrust push back from many. However from a business standpoint this could present themselves with an opportunity to capitalize on the volume of both. I spent a few years of my adult life in wholesale grocery basically selling food to grocery stores KR was a customer as well as WMT. The wholesale prices are negotiated at a corporate level IE WMT pays X amount for 20 cases of frozen pizza and KR pays Y. This is all determined by volume of orders.

With this merger Id expect it lowers KR cost of product based upon volume significantly this could allow it to compete with likes of WMT in the grocery space. Both KR and ACI had pretty big cut on Friday.

Also not really sure how these mergers of two publicly traded companies work in valuations or as share prices pertain. As I don’t remember a lot of them happening. But something for the radar as KR already posted ER and has been a great company for a long time.

Maybe someone familiar with how these mergers work can shed some light what to expect here.


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