(Bloomberg) — Kroger Co. is tapping the US investment-grade market on Tuesday to help fund its acquisition of fellow grocer Albertsons Cos. in what could be one of the biggest corporate bond deals of the year.
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The supermarket chain is looking to sell debt in as many as seven parts, according to a person with knowledge of the matter, and the size may be around $10 billion, Bloomberg previously reported. The longest portion of the deal, a 40-year security, may yield around 1.9 percentage points over Treasuries, the person said, asking not to be identified as the details are private.
Some of the tranches include so-called special mandatory redemption language in which bonds would be called back if the Albertsons acquisition isn’t completed.
The deal size will be set later Tuesday before the offering is priced, but is expected to come in at or above $10 billion. If so, Kroger’s issuance would be one of this year’s biggest for the US high-grade primary market.
Representatives for Kroger and Wells Fargo & Co., one of the managers on the deal, declined to comment. A spokesperson for Citigroup Inc. didn’t immediately respond to a request for comment.
Kroger agreed to buy Albertsons in October 2022 in a deal initially valued at $24.6 billion. Whether the Cincinnati, Ohio-based supermarket chain is able to purchase its smaller peer remains in doubt.
A trial is set to begin Aug. 26 on the Federal Trade Commission’s lawsuit to block the deal, initially valued in 2022 at $24.6 billion. A separate case involving Colorado’s opposition to the proposed buyout is scheduled to start Sept. 30. The supermarket operators have proposed to sell nearly 600 stores and lower grocery prices by $1 billion.
The grocer is among four potential issuers looking to sell new US investment-grade bonds Tuesday, according to an informal survey of debt underwriters, who declined to name the firms.
–With assistance from Kevin Kingsbury, Olivia Raimonde and Michael B. Marois.
(Updates with details throughout.)
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