Kroger Plans Minimum 7-Tranche Bond Sale for Albertsons Deal
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Kroger Co. is poised to sell investment-grade bonds in at least seven parts to help fund its proposed acquisition of fellow grocer Albertsons Cos. as antitrust scrutiny continues to hang over the plan.
A prospectus was filed with the Securities and Exchange Commission on Aug. 19 for Kroger to sell notes that would mature between 2026 and 2064. Proceeds — along with cash on hand, term-loan borrowings and, if necessary, other borrowings — would pay the cash consideration of the takeover.
Whether Kroger is able to purchase its smaller peer remains in doubt. A trial is set to begin Aug. 26 on the Federal Trade Commission’s lawsuit to block the deal, initially valued in 2022 at $24.6 billion. A separate case involving Colorado’s opposition to the proposed buyout is scheduled to start Sept. 30. The supermarket operators have proposed to sell nearly 600 stores and lower grocery prices by $1 billion.
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Kroger ranks No. 26 on the Transport Topics Top 100 list of the largest private carriers in North America, and Albertsons is No. 42. Kroger and Albertsons also rank Nos. 3 and 5, respectively, on the TT grocery list.
Kroger was holding investor calls Aug. 19 that were arranged by Citigroup Inc. and Wells Fargo & Co. ahead of a potential debt offering, a person with knowledge of the matter said last week. The big grocer also launched a $7.44 billion offer to exchange Albertsons bonds with new notes.
JPMorgan Chase & Co. remains overweight on Albertsons debt, saying in an Aug. 16 report that the firm’s notes would move toward Kroger bonds’ levels if the takeover is completed. Even if there’s just a 50-50 chance of the buyout happening, fair value for Albertsons’ notes is tighter than recent spreads, analysts including Carla Casella wrote.
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