Albertsons buys meal kit company Plated

Key Points
  • Albertsons is buying meal-kit company Plated
  • The deal is the grocer's first big strategic move since Amazon's Whole Foods acquisition sent ripples through the market
Albertsons buys Blue Apron rival Plated
Albertsons buys Blue Apron rival Plated

Albertsons, one of the largest U.S. grocers, is acquiring meal kit service Plated, the company's first high-profile move since Amazon bought Whole Foods Market.

Albertsons, which has 2,300 stores across the U.S., announced the deal for the e-commerce company on Wednesday. Talks began several months ago.

"This transaction is the latest example of Albertsons meeting our customers wherever and however they like to shop," said Bob Miller, chairman and CEO of Albertsons.

The deal will give Albertsons access to Plated's technology and data, an easier feat than having to build up that infrastructure itself, Miller said.

It will also help address one of the greatest challenges facing meal-kit companies: the extensive marketing costs to fight for customers and operational costs to deliver fresh food broadly.

Albertsons will be putting Plated meal kits in its stores and eventually help to deliver them with its trucks.

The deal distinguishes Plated from the meal kit industry's largest competitor, Blue Apron.

"If I were Blue Apron, I would feel naked," Plated investor Kevin O'Leary told CNBC's "Fast Money" on Wednesday. "I would feel that I need a partner with stores and I need it now because this is all about getting customers into the cycle of subscriptions.

Blue Apron's stock was up just under 2 percent in after-hours trading, after trading down for the day more than five percent

The Amazon effect

Both grocers and and meal kit companies have scrambled to react to Amazon's $13.7 billion acquisition of Whole Foods earlier this year.

Kroger's stock has plummeted roughly 30 percent since the deal was announced. The biggest and only public meal kit company, Blue Apron, now has a market capitalization of $992 million, well below the $2.2 billion valuation it fetched in the private markets.

Amazon, which had experimented with meal kits prior to its Whole Foods acquisition, put meal kit companies on alert in July, when it registered a U.S. trademark for a service described as: "We do the prep. You be the chef."

The service will provide customers "prepared food kits ... ready for cooking and assembly as a meal," according to the trademark application.

The tech giant has about 31 million households with access to an Amazon Prime membership and more than half of them are already purchase groceries online via the website. Its access to roughly 400 Whole Foods stores across the U.S. could further fortify it as a competitor in the meal kit space.

Cerberus and a consortium of investors helped to form Albertsons companies LLC in 2006, and it then later merged with the grocer Safeway in 2015.

It had tried to go public, filing for an IPO in 2015, but had to put those plans on hold amid market jitters and later as Kroger's stock faltered. The IPO has continued to be on hold.

Disclaimer: CNBC owns the exclusive off-network cable rights to "Shark Tank." Shark Tank's Kevin O'Leary is an investor in Plated.