ACI - Kroger Deserves More Love
2024-05-23 11:52:59 ET
Summary
- I believe there is a high probability that the deal between Kroger and Albertsons will not be completed.
- While this may be disappointing, this doesn't mean investors should stay away from these firms.
- Despite a decline in profitability recently, Kroger's stock is attractively priced and presents a favorable risk-to-reward opportunity.
Ever since it was announced that The Kroger Co. ( KR ) would be acquiring Albertsons Companies, Inc. ( ACI ) in a multi-billion-dollar transaction to create one of the largest food retailers in the country, I have been of the opinion that there is a relatively high probability that the deal will fall through. In fact, in early February of this year, I even said that, because of regulatory concerns, it looked almost certain that the transaction would never be completed. In that article , I made the claim that there was close to a 0% probability of the deal being completed. This led me to reiterate my 'strong buy' rating for Albertsons because, while the deal going through would result in significant short-term upside, shares looked significantly undervalued even if the company continued operating on its own....
Kroger Deserves More Love