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U.S. grocer Kroger Co. (KR - Free Report) agreed to buy smaller rival Albertsons Companies Inc. (ACI - Free Report) , which owns Safeway, for $24.6 billion. If completed, the buyout would create one of the largest grocery store chains in the United States. The transaction would be one of the largest mergers in U.S. retailer history.
Following the news, shares of KR dropped 7.3% on the day. The stock crushed its average volume as 19.7 million shares moved hands compared with 6.2 million, on average. Meanwhile, shares of ACI also declined 8.4%.
This put the spotlight on some ETFs, which could be the best ways for investors to tap the opportunity arising from the proposed Kroger-Albertsons deal. Investors should keep a close eye on the movement of these ETFs — Invesco S&P 500 Equal Weight Consumer Staples ETF , Invesco Dynamic Food & Beverage ETF (PBJ - Free Report) , Invesco DWA Consumer Staples Momentum ETF (PSL - Free Report) , and VanEck Vectors Retail ETF (RTH - Free Report) over the coming weeks.
Deal in Focus
Per the terms of the deal, Kroger will pay $34.10 for each Albertsons share, representing a premium of about 33% to the stock's closing price on Oct 12. The merger would combine the first and second largest grocery chains in the United States and bring together more than 2,700 Kroger stores across the United States and over 2,200 Albertsons locations. The combined company would have a national footprint with an expanded customer reach of about 85 million households.
The proposed deal would give the new company an edge over negotiations on product prices with suppliers, including consumer goods companies, at a time when prices of groceries and essentials are soaring in the country. The new company would ultimately offer lower prices for shoppers.
Once completed, the merger would create a supermarket titan to take on leader Walmart Inc. (WMT - Free Report) with more than 5,000 stores, including banners such as Ralphs and Fred Meyer, as well as other regional supermarket chains with mostly unionized workforces. The combined company would have a national footprint with an expanded customer reach of about 85 million households (read: Here's Why to Buy Top-Ranked Consumer Discretionary ETFs).
The merger process could take up to two years, with the deal expected to close in early 2024. The deal, which has called for anti-trust litigation, would bring in around $209 billion in revenues and generate about $500 million of "cost savings from synergies." The companies might have to divest between 100 to 375 stores in a subsidiary called SpinCo in order to get approval.
ETFs in Focus
Let’s delve into each ETF below:
Invesco S&P 500 Equal Weight Consumer Staples ETF
Invesco S&P 500 Equal Weight Consumer Staples ETF tracks the S&P Equal Weight Consumer Staples Index, holding 34 stocks in equal weights. Food products takes the largest share at 41.2%, while beverages, household products and food & staples retailing round off the next three spots with double-digit exposure each.
Invesco S&P 500 Equal Weight Consumer Staples ETF has amassed $589.1 million in its asset base and trades in an average daily volume of 48,000 shares. It charges 40 bps in annual fees and has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook.
Invesco Dynamic Food & Beverage ETF offers exposure to 31 stocks engaged in manufacturing, selling or distributing food and beverage products, agricultural products and products related to the development of new food technologies by tracking the Dynamic Food & Beverage Intellidex Index.
With an AUM of $323 million, Invesco Dynamic Food & Beverage ETF charges 63 bps worth of annual fees from investors and sees a moderate average daily volume of 91,000 shares. PBJ has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Invesco DWA Consumer Staples Momentum ETF (PSL - Free Report)
Invesco DWA Consumer Staples Momentum ETF tracks the Dorsey Wright Consumer Staples Technical Leaders Index, holding 42 stocks in equal weights. Food & staples takes the largest share at 27.9%, while food products, beverages, and diversified consumer services retailing round off the next three spots with a double-digit exposure each (read: 'Shrinkflation' to Save Consumer Staples ETFs).
Invesco S&P 500 Equal Weight Consumer Staples ETF has amassed $111.9 million in its asset base and trades in an average daily volume of 3,000 shares. It charges 60 bps in annual fees and has a Zacks ETF Rank #4 with a Medium risk outlook.
VanEck Vectors Retail ETF provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers.
VanEck Vectors Retail ETF has amassed $159.3 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 10,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #3 with a Medium risk outlook.
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Kroger to Become Grocery Superchain: ETFs to Tap
U.S. grocer Kroger Co. (KR - Free Report) agreed to buy smaller rival Albertsons Companies Inc. (ACI - Free Report) , which owns Safeway, for $24.6 billion. If completed, the buyout would create one of the largest grocery store chains in the United States. The transaction would be one of the largest mergers in U.S. retailer history.
Following the news, shares of KR dropped 7.3% on the day. The stock crushed its average volume as 19.7 million shares moved hands compared with 6.2 million, on average. Meanwhile, shares of ACI also declined 8.4%.
This put the spotlight on some ETFs, which could be the best ways for investors to tap the opportunity arising from the proposed Kroger-Albertsons deal. Investors should keep a close eye on the movement of these ETFs — Invesco S&P 500 Equal Weight Consumer Staples ETF , Invesco Dynamic Food & Beverage ETF (PBJ - Free Report) , Invesco DWA Consumer Staples Momentum ETF (PSL - Free Report) , and VanEck Vectors Retail ETF (RTH - Free Report) over the coming weeks.
Deal in Focus
Per the terms of the deal, Kroger will pay $34.10 for each Albertsons share, representing a premium of about 33% to the stock's closing price on Oct 12. The merger would combine the first and second largest grocery chains in the United States and bring together more than 2,700 Kroger stores across the United States and over 2,200 Albertsons locations. The combined company would have a national footprint with an expanded customer reach of about 85 million households.
The proposed deal would give the new company an edge over negotiations on product prices with suppliers, including consumer goods companies, at a time when prices of groceries and essentials are soaring in the country. The new company would ultimately offer lower prices for shoppers.
Once completed, the merger would create a supermarket titan to take on leader Walmart Inc. (WMT - Free Report) with more than 5,000 stores, including banners such as Ralphs and Fred Meyer, as well as other regional supermarket chains with mostly unionized workforces. The combined company would have a national footprint with an expanded customer reach of about 85 million households (read: Here's Why to Buy Top-Ranked Consumer Discretionary ETFs).
The merger process could take up to two years, with the deal expected to close in early 2024. The deal, which has called for anti-trust litigation, would bring in around $209 billion in revenues and generate about $500 million of "cost savings from synergies." The companies might have to divest between 100 to 375 stores in a subsidiary called SpinCo in order to get approval.
ETFs in Focus
Let’s delve into each ETF below:
Invesco S&P 500 Equal Weight Consumer Staples ETF
Invesco S&P 500 Equal Weight Consumer Staples ETF tracks the S&P Equal Weight Consumer Staples Index, holding 34 stocks in equal weights. Food products takes the largest share at 41.2%, while beverages, household products and food & staples retailing round off the next three spots with double-digit exposure each.
Invesco S&P 500 Equal Weight Consumer Staples ETF has amassed $589.1 million in its asset base and trades in an average daily volume of 48,000 shares. It charges 40 bps in annual fees and has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook.
Invesco Dynamic Food & Beverage ETF (PBJ - Free Report)
Invesco Dynamic Food & Beverage ETF offers exposure to 31 stocks engaged in manufacturing, selling or distributing food and beverage products, agricultural products and products related to the development of new food technologies by tracking the Dynamic Food & Beverage Intellidex Index.
With an AUM of $323 million, Invesco Dynamic Food & Beverage ETF charges 63 bps worth of annual fees from investors and sees a moderate average daily volume of 91,000 shares. PBJ has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Invesco DWA Consumer Staples Momentum ETF (PSL - Free Report)
Invesco DWA Consumer Staples Momentum ETF tracks the Dorsey Wright Consumer Staples Technical Leaders Index, holding 42 stocks in equal weights. Food & staples takes the largest share at 27.9%, while food products, beverages, and diversified consumer services retailing round off the next three spots with a double-digit exposure each (read: 'Shrinkflation' to Save Consumer Staples ETFs).
Invesco S&P 500 Equal Weight Consumer Staples ETF has amassed $111.9 million in its asset base and trades in an average daily volume of 3,000 shares. It charges 60 bps in annual fees and has a Zacks ETF Rank #4 with a Medium risk outlook.
VanEck Vectors Retail ETF (RTH - Free Report)
VanEck Vectors Retail ETF provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers.
VanEck Vectors Retail ETF has amassed $159.3 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 10,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #3 with a Medium risk outlook.