Kroger stock prices were up on Friday, trading at $43.90 as of 01:28 PM EDT.

The acquisition of Albertsons Companies (NYSE:ACI) by Kroger (NYSE:KR) for $24.6 billion shook the grocery retail industry. The combined business will operate about 5,000 grocery stores and be the second-largest in the industry after Walmart (NYSE:WMT). In a few years, the purchase is likely to have big synergies and accretion benefits. The deal is one of the biggest in the history of grocery stores, but the Biden administration, which has been against several mergers, could challenge it on regulatory grounds.

According to an early analysis by experts, the mega-merger might boost industry prices, including for Target (NYSE:TGT) and Costco (NASDAQ:COST), without posing a severe threat to market share for many of the main competitors.

Kroger stock, merger interview

After hearing about the purchase, investors started looking at other grocery store stocks. Sprouts Farmers Market’s (NASDAQ:SFM) stock increased 1.16% in premarket trading on Friday, adding to its 4.43% gain on Thursday. Three further grocery-related companies that gained on Thursday and may continue to rise on Friday are Ingles Markets (NASDAQ:IMKTA), Natural Grocers by Vitamin Cottage (NGVC), and Grocery Outlet Holdings (GO). Notably, Sysco (NYSE: SYY) and US Foods (NYSE: USFD) both increased additions by more than 2%.

In an interview with Reuters, Kroger Co. CEO Rodney McMullen said that the savings from the deal would allow the chains to lower prices for customers. He mentioned “cost savings from synergies” of $500 million that the new company could use for pricing reductions.

McMullen claimed that the combined company would be better able to compete against “bigger, non-union” grocery stores, referring to companies like Walmart Inc. and Target Corp., both of which also sell food.

Once the merger is completed, it will become a giant in the grocery industry with more than 5,000 locations, including names like Ralph’s and Fred Meyer’s, as well as other local supermarket chains with a large percentage of unionized employees. Given that inflation is at multi-decade highs, prices are on consumers’ minds right now.

According to a Reuters analysis of a shopping cart on Kroger’s website, the company typically charges more than Walmart for necessities like rice, sausages, and bread. Six Hebrew National beef franks cost $5.49 at Kroger.com compared to $5.18 at Walmart.com, while a 14-ounce packet of Minute white rice costs $2.99 at Kroger.com versus $2.14 at Walmart.com. Sara Lee Classic White Sandwich Bread 20-ounce packets cost $2.50 at Kroger versus $2.24 at Walmart.

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