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The Key Takeaways
- Kroger shares rose after the announcement that a Federal Court had blocked their planned merger with Albertsons.
- The combined company would be one of largest supermarket chains.
- Companies argued it would improve their ability to compete with Walmart, and other retailers. Regulators were more concerned with the effect of this combination on consumers.
The shares of Kroger (KR), a major grocery retailer, finished higher on Tuesday afternoon after a federal court ruled against its merger plan with Albertsons.
Kroger's stock finished the day up more than 5%, while Albertsons was off more than 2%. The Wall Street Journal, among other outlets, reported that a federal judge had blocked the transaction, agreeing to regulators’ arguments about how it would harm consumers through a reduction in competition.
After the planned divestments, which the companies announced to alleviate regulators’ fears, it would still have been a huge grocery store. Companies argued the merger would make the chain more competitive against Walmart and other retailers.
Journal said that the court case could go on, although the two companies may decide now to abandon the transaction.
The quarterly revenues and earnings of Kroger were below analyst expectations earlier this month.
Kroger shares are up about 30% in value this year while Albertsons is down around 20%.
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