RBC: If the merger with Kroger fails, the stock price of Albertsons (ACI.US) may reach $21

The Zhitong Finance App learned that RBC analyst Steven Shemesh said that if the US grocery company ACI.US (ACI.US) sale of nearly $25 billion to its counterpart Kroger (KR.US) is rejected by the court, then Abbotson's stock price may reach $21 per share. On Monday, Albertsons closed at $18.26.

According to data, in October 2022, Kroger announced the acquisition of Albertsons for 24.6 billion US dollars. The merger and acquisition will create a new grocery store giant with thousands of stores across the US and will become one of the nation's largest employers, with hundreds of thousands of workers.

However, the deal faced legal action from regulators due to concerns about reducing competition in the market and harming consumers' rights. In February of this year, the US Federal Trade Commission (FTC) filed a lawsuit to block this merger and acquisition deal, claiming that it would cause consumers to pay higher prices. Eight states and Washington, D.C., have also joined forces with regulators to block the deal. Colorado and Washington have also filed separate lawsuits to try to end the merger agreement.

In April of this year, Albertson and Kroger also stated that they will sell 579 stores across the US to assuage the concerns of regulators about the proposed merger, successfully pass antitrust reviews, and ensure the healthy development of market competition. Earlier in August, Kroger said that after completing the merger with Albertson, the company plans to cut grocery prices to give back $1 billion to consumers. This figure is more than double the company's previous commitment of $500 million, a move aimed at easing antitrust concerns about this merger and acquisition deal.

Analyst Steven Shemesh said: “If the deal fails, we think Abbotson management will reconsider other ways to create shareholder value as determined in the company's 2022 strategic assessment.” The analyst rated Albertsons stock as “overweight,” with a target price of $23. He also added: “We have a feeling that fundamental investors will have to enter the market around $16.”