The largest grocery store chain in the country could be getting a bit bigger and a lot more organic, as the rumor mill began churning that Kroger is exploring the idea of buying Whole Foods.
News of a potential acquisition by Kroger — which operates more than 2,700 stores under brands such as Pick ’n Save and Fry’s in the U.S. — sent Whole Foods stock up nearly 5% late Thursday to $29.33, Investor’s Business Daily reports.
While both Kroger and Whole Foods declined to comment on the speculation of a deal, Cincinnati.com estimates — based on Kroger’s past purchases — that the acquisition could be valued at around $9.7 billion.
Despite the grocery chains’ closed lips, analysts believe such an agreement could make sense.
For starters, the potential acquisition of Whole Foods also follows Kroger’s rumored interest in buying The Fresh Market, which was sold earlier this year, Cincinnati.com reports.
Additionally, Kroger’s growing organic food ventures — it’s captured an estimated $1 billion in sales from house brand Simple Truth — and Whole Foods’ sagging sales make a deal more attractive.
According to Cincinnati.com, Whole Foods stock has nearly halved in value since 2013, with annual sales stagnating between $550 million and $580 million for the past three years.
Whole Foods Soars On Kroger Takeover Rumor, Wal-Mart Plans [Investor’s Business Daily]
Could Kroger buy out Whole Foods? [Cincinnati.com]
by Ashlee Kieler via Consumerist