Bloomberg AUGUST 27, 2020 12:06:09A food revolution has begun at the largest supermarket chain in the U.S., Wal-mart Stores Inc. (WMT).
The announcement by Wal-marts board chairman and chief executive officer Bill Simon that the nation’s biggest grocery retailer has agreed to buy Aldi, a French food and wine retailer, will be followed by other consolidation moves as Wal- mart’s stock price falls as a result of the deal.
Wal-mart will pay $4.7 billion for the discount retailer, with the total value of the agreement expected to exceed $5.7 trillion.
The deal will be completed by the end of 2020, when Aldi will sell its assets.
Walmart shares fell 0.8 percent in after-hours trading, after the company announced the deal, but were up 2.7 percent after the announcement was made.
The stock is down about 2 percent over the past week.
Aldi’s shares rose 0.3 percent to 6,926 euros in premarket trading.
A spokesman for Aldi did not immediately respond to a request for comment.
The deal will create the world’s largest discount grocery store chain, with stores in over 200 countries.
Aldi’s stores sell more than 5 million products and are often frequented by shoppers.
Its business model is similar to Wal-Marts, which are typically staffed by workers who make about $11 an hour.
Aldis stores sell primarily to restaurants, but also carry some organic and other goods.
In its statement, Wal- marts said the deal was a strategic move to better align our operations to the needs of our customers and our shareholders.
It said that Aldi was the world leader in organic groceries and its stores in Canada and Mexico serve an important niche for consumers looking for the freshest food, and Aldi offers a superior value proposition to Walmarts as a discount grocery.
In addition, the Aldi purchase will allow Wal- mar to further enhance its organic offerings, and will enable us to deliver more value to our shareholders through lower prices, a better product selection and a more integrated retail strategy.