Bullish indicating open at $55-$60, IPO prices at $37
CINCINNATI - The Kroger Co . (NYSE: NYSE:KR) has filed a motion for a preliminary injunction in the U.S. District Court, Southern District of Ohio, to halt the Federal Trade Commission's (FTC) administrative proceedings regarding its planned merger with Albertson's Companies, Inc. Kroger contends that the FTC's approach, which includes a separate action in federal court, is unconstitutional.
According to the motion, the FTC's administrative process is flawed on two constitutional grounds. Firstly, the Administrative Law Judge presiding over the FTC's tribunal cannot be removed by the President, which Kroger argues violates Article II of the Constitution, referencing the Supreme Court's decision in Free Enterprise Fund v. Public Company Accounting Oversight Board from 2010. Secondly, Kroger claims that the FTC's attempt to adjudicate the company's private right to contract with Albertson's administratively infringes on Article III, as the Supreme Court highlighted in SEC v. Jarkesy this term.
Kroger's Chairman and CEO, Rodney McMullen, stated that the merger is aimed at providing customers with lower prices from the outset and securing well-paid union jobs. He affirmed the company's readiness to defend the merger in the appropriate federal court venue and seeks to prevent what it views as an unlawful proceeding by the FTC's in-house tribunal.
The FTC has also filed a motion in federal court to block the merger for the duration of its administrative proceeding, which could take years to resolve. Evidentiary hearings for the federal court case are scheduled to begin on August 26 in the District of Oregon.
The Kroger Co. emphasizes its commitment to feeding the human spirit and serving millions of customers daily through a seamless digital shopping experience and various retail food stores. The information for this article is based on a press release statement from The Kroger Co.
In other recent news, Kroger Co. has been actively involved in several significant developments. The company has filed a lawsuit against the Federal Trade Commission, challenging the constitutional validity of the internal review process for its proposed $25 billion merger with Albertsons (NYSE:ACI) Companies Inc. The merger, aimed at creating a more competitive player in the grocery industry, is currently under scrutiny to ensure it does not violate antitrust laws.
In addition to this, Kroger has received consent from Deloitte & Touche LLP to use their reports on Albertsons' financial statements, a move connected to Kroger's registration statement on Form S-3. The company has also announced a $1 billion reduction in grocery prices following the completion of its merger with Albertsons.
Kroger also released pro forma financial information reflecting the company's status post-merger. These financial statements are based on the merger agreement and include a balance sheet and statements of operations. However, the company warns that actual results could significantly differ from these pro forma financial statements due to various risk factors.
In analyst notes, Argus has raised its price target for Kroger shares to $72, maintaining a "Buy" rating, while Wells Fargo has reiterated its Overweight rating on Kroger shares with a steady price target of $65. Lastly, Regency Centers (NASDAQ:REG), which includes Kroger among its tenants, has raised its annual funds from operations forecast for fiscal 2024, following a strong Q2 performance.
InvestingPro Insights
In the midst of its legal battle with the FTC over the planned merger with Albertson's, The Kroger Co. (NYSE: KR) remains a formidable entity in the retail space, with recent data from InvestingPro underscoring its financial stability and market position. Kroger's commitment to shareholder returns is evident, as the company has raised its dividend for 18 consecutive years, showcasing a reliable income stream for investors. This dedication to consistent dividend growth is a testament to its financial health, as noted in the InvestingPro Tips, which also highlight Kroger as a prominent player in the Consumer Staples Distribution & Retail industry.
InvestingPro Data reflects a solid market capitalization of $38.3 billion, with a P/E ratio standing at 17.86, indicating that investors value the company's earnings quite highly. Moreover, the company's revenue for the last twelve months as of Q1 2025 reached an impressive $150.14 billion, with a gross profit margin of nearly 23%, demonstrating Kroger's ability to maintain profitability and manage its cost of goods effectively.
While the company’s short term obligations exceeding liquid assets could be a point of concern, it's important to note that Kroger has been profitable over the last twelve months and analysts predict it will continue to be profitable this year. Investors interested in understanding the full picture can find additional insights, as there are over 6 more InvestingPro Tips available for KR, which can be accessed for further analysis and decision-making support.
As the company navigates through the complexities of the merger and legal proceedings, its financial metrics and market performance, including a strong return over the last five years, remain key factors for investors to watch. The company's next earnings date is set for September 6, 2024, which will likely provide further clarity on its financial trajectory and the impact of ongoing legal challenges.
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