FTC moves to block Kroger's $24.6B acquisition of Albertsons

Shares of Kroger (KR) fell after the Federal Trade Commission moved to block its $24.6 billion acquisition of Albertsons (ACI). The FTC claims the merger would harm both American consumers and workers.

Yahoo Finance Anchors Josh Lipton and Julie Hyman break down what this means for the companies and how it may impact them going forward.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

JOSH LIPTON: The Federal Trade Commission is suing to block Kroger's $24.6 billion acquisition of Albertsons. Kroger responded saying that blocking of the deal will actually harm the very people the FTC purports to serve, America's consumers and workers. So the FTC-- and my understanding is, Julie, it's actually also eight states, Washington DC suing to block this acquisitions.

They don't like it. They argue it's going to mean higher prices for groceries. It's going to mean lower wages for workers. So the combination of these two chains would lead to just a very concentrated market.

JULIE HYMAN: This has been going on for a while, first of all, we should mention. The two first agreed--

JOSH LIPTON: Yeah.

JULIE HYMAN: --to team up in late 2022. It's almost $25 billion acquisition. And at the time, it was expected that there would be a challenge at some point. But it sort of dragged on and dragged on and dragged on.

And now finally, here in early 2024, we are getting this formal challenge from the FTC. The grocery stores are arguing that the FTC's view of the grocery industry is outdated. They bring up competitors like Amazon like Walmart in the industry that they say, it's not about just looking at traditional grocery stores. It's about widening the aperture here of what constitutes a grocery store. At the same time, the two have already planned to sell off some of their holdings. And the FTC says, no, that's not enough.

JOSH LIPTON: Yeah, they try to clearly placate them--

JULIE HYMAN: Yeah.

JOSH LIPTON: --with that. But that did not work. Just interesting, I mean, just the broader story, which we talk so much about on the show about how regulators just so much more aggressive--

JULIE HYMAN: Yeah.

JOSH LIPTON: --now, when it comes to deal-making, JetBlue and Spirit, Microsoft Activision. Just a very different regulatory backdrop, regardless of the industry you're in.

JULIE HYMAN: It is. And that's-- if you look at how the stocks are reacting today, we're not seeing a huge reaction--

JOSH LIPTON: Expected.

JULIE HYMAN: --in part. And this-- and this challenge, in particular, was expected. But--

JOSH LIPTON: Yeah

JULIE HYMAN: --to your point, the broader environment is also just seen that way right now.