Investor Information

Compelling Value Creation Opportunity for Shareholders

  • On a combined basis, the two companies delivered ~$210B in revenue, $3.3B in net earnings and $11.6B of adjusted EBITDA in FY 20211

  • The combined capabilities will accelerate growth of Alternative Profit Businesses

  • Expect to deliver ~$1B of annual run-rate synergies net of divestitures within the first four years following close, with 50% achieved within the first two years post-close, largely through improved sourcing, optimization of manufacturing and distribution networks, and technology investment amplification opportunities

  • More resilient business model expected to deliver TSR well above Kroger's standalone model of 8 – 11% during the first four years post close

  • Transaction expected to be accretive to earnings in the first year following close and double digit accretive to earnings by year four, excluding one-time costs

  • Kroger is strongly committed to an investment grade credit rating and has already paused its share repurchase program to prioritize de-leveraging to achieve 2.5x EBITDA net leverage target in first 18 – 24 months post-merger

Facade of Kroger store
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Key Terms

  • Purchase price of $24.6B, including the assumption of approximately $4.7B of Albertsons Cos. net debt

  • All-cash transaction to acquire Albertsons Cos. for an estimated total consideration of $34.10 per share

  • Premium of ~32.8% to unaffected closing price of Albertsons Cos. common stock on October 12, 2022, and 29.7% to the 30-day VWAP

  • Albertsons Cos. intends to declare and pay special cash dividend of up to $4B before close, which will reduce purchase price commensurately

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Expected Closing

Completion expected in early 2024

Subject to receipt of required regulatory clearance and other customary closing conditions, including HSR clearance

As a mechanism to accomplish store divestitures in certain areas, Albertsons Cos. is prepared to establish a subsidiary to be spun-off to Albertsons Cos. shareholders immediately prior to close and operate as standalone public company; SpinCo would be new, agile competitor with quality stores, experienced management, operational flexibility, a strong balance sheet and focused allocation of capital and resources to provide customers with continued value and quality service and associates with ongoing compelling career opportunities

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Management

Rodney McMullen, Chairman and Chief Executive Officer

Gary Millerchip, Chief Financial Officer

1 Based on combined results for each company’s most recent fiscal year, respectively.