Kroger’s (NYSE: KR) attempted takeover of Albertson’s (NYSE: ACI) failed, leaving Albertson’s investors wondering what would come next and Kroger’s in an envious position. Although there is a risk of litigation and the potential for a $600 million termination fee, it is small potatoes to the balance sheet improvement, capital position, and returns.
Two years ago, Kroger suspended its share repurchase program to shore up its balance sheet and build cash for the acquisition. Now that the acquisition is out of the picture, the company’s balance sheet is as healthy as ever, and buybacks have resumed.
