The unaudited pro forma condensed combined financial information for The Kroger Co. and Albertsons Companies, Inc. reveals significant changes following the proposed transaction and related planned divestitures. The pro forma financial information presents the effects of the Transactions, which include the proposed merger of Albertsons with Kroger, divestitures to C&S Wholesale Grocers LLC, and related planned financing to be entered into by Kroger.
The pro forma financial information for the first quarter ended May 25, 2024, shows a combined net sales of $92,163 million, a significant increase from the combined net sales of $64,245 million for the same period in the prior year. Additionally, the combined cost of sales for the first quarter ended May 25, 2024, amounted to $69,802 million, up from the combined cost of sales of $47,813 million for the previous year's first quarter.
Moreover, the pro forma financial information for the year ended February 3, 2024, demonstrates a combined net income of $2,837 million, reflecting a notable surge from the combined net income of $1,876 million for the year ended February 24, 2024. Additionally, the combined total assets as of May 25, 2024, amounted to $144,597 million, an increase from the combined total assets of $131,468 million as of February 24, 2024.
The divestitures to C&S Wholesale Grocers LLC, which involved the sale of 579 stores and other assets, led to an estimated cash consideration of approximately $2,761 million. These divestitures are subject to fulfillment of customary closing conditions, including clearance by the Federal Trade Commission and the completion of the Merger.
In connection with the Merger, Kroger incurred $14,750 million of new indebtedness to finance a portion of the Merger consideration. This consisted of $4,750 million incurred under senior unsecured term loans and $10,000 million in additional new financing. Kroger also plans to offer eligible holders of Albertsons outstanding notes the opportunity to exchange such outstanding notes for Kroger notes.
The pro forma financial information has been prepared using the acquisition method of accounting, with Kroger treated as the accounting acquirer for the Merger. This approach requires that the assets acquired and liabilities assumed in a business combination be recognized at their fair value as of the acquisition date.
The market has reacted to these announcements by moving the company's shares 1.0% to a price of $52.89. Check out the company's full 8-K submission here.
