Kroger and Albertsons are escalating their efforts to secure regulatory approval for their proposed $25bn merger by planning to sell additional stores to C&S Wholesale Grocers.
In September last year, the retailers had initially planned to divest more than 400 stores to C&S Wholesale Grocers, aiming to gain the necessary regulatory green light for a merger first unveiled in October 2022.
However, the merger faced a significant hurdle in February when the US Federal Trade Commission (FTC) sought to block it. The FTC argued that the merger would adversely affect both the retailers’ staff and customers, a claim both Kroger and Albertsons rejected.
The FTC also criticized the original divestiture plan, describing it as “inadequate” and a “hodgepodge of unconnected stores, banners, brands, and other assets that Kroger’s antitrust lawyers have cobbled together.”
In response, today Kroger and Albertsons announced their decision to sell an additional 166 stores to C&S Wholesale Grocers, bringing the total number of stores to be divested to 579.
The retailers stated that this agreement “responds to concerns raised by federal and state anti-trust regulators” and expressed their belief that the new package would “bolster their position in regulatory challenges to the proposed merger, including pending court proceedings.”
The legal battle spearheaded by the FTC is scheduled for August, with Attorneys General from eight US states and the District of Columbia joining the federal lawsuit.
“Importantly, the updated divestiture plan continues to ensure no stores will close as a result of the merger and that all frontline associates will remain employed, all existing collective bargaining agreements will continue, and associates will continue to receive industry-leading health care and pension benefits alongside bargained-for wages,” Kroger chairman and CEO Rodney McMullen said. “Our proposed merger with Albertsons will bring lower prices and more choices to more customers and secure the long-term future of unionised grocery jobs.”
Under the revised deal, Kroger will sell the Haggen banner to C&S Wholesale Grocers, alongside the QFC, Mariano’s, and Carrs chains as initially agreed. Stores under these banners that are retained by Kroger will be rebranded to match the names of chains that the enlarged retailer will keep.
Additionally, the agreement entails C&S Wholesale Grocers licensing the Albertsons banner in California and Wyoming and the Safeway banner in Arizona and Colorado.
“We are confident this expanded divestiture package will provide the stores, supporting assets and expert operators needed to ensure these stores continue to successfully serve their communities for many generations to come,” said Eric Winn, CEO of C&S Wholesale Grocers.
Kroger and Albertsons together employ over 700,000 individuals across nearly 5,000 stores in 49 states, generating more than $200bn in annual revenue.
The FTC has yet to comment on this new agreement between Kroger, Albertsons, and C&S Wholesale Grocers. Just Food has reached out to the United Food and Commercial Workers International Union, which has opposed the deal, for their input.
