Kroger and Albertsons aim to sell more stores to C&S Wholesale Grocers to pacify regulators and gain the $25 billion mega-merger approval.
The FTC Blocking $25B Mega-Merger Deal
The two major grocers in the U.S. announced their plan of selling over 400 stores to C&S Wholesale Grocers in September to secure approval for the transaction initially announced in October 2022, which was blocked by the U.S. Federal Trade Commission, arguing that it would harm both the retailers' employees and customers, which Kroger and Albertsons rejected. The competition watchdog also criticized the plan for store disposals outlined in September, deeming it "inadequate" and describing it as a collection of disconnected stores, banners, brands, and assets assembled by Kroger's antitrust lawyers.
READ ALSO: Kroger, Albertsons Merger's Delay: Lawmakers Strongly Oppose as "Harmful" for Shoppers and Workers
Kroger and Albertsons Selling and Offloading More Outlets
Kroger and Albertsons announced today that they would sell an additional 166 outlets to C&S Wholesale Grocers, offloading a total of 579 stores under the new deal.
The retailers highlighted in their statement that the agreement addresses concerns raised by federal and state antitrust regulators and argued that this new proposed merger package would bolster their position in regulatory challenges, including pending court proceedings.
Kroger's Full Commitment to The Merger
The FTC's legal attempt to halt the deal is scheduled for August, with Attorneys General from eight U.S. states, along with the District of Columbia, joining the FTC's federal lawsuit.
Kroger chairman and CEO Rodney McMullen emphasized that the updated divestiture plan ensures no store closures will happen, all frontline associates will retain their employment, existing collective bargaining agreements will remain in place, and associates will continue to receive industry-leading health care, pension benefits, and negotiated wages. McMullen also stated that the proposed Albertsons merger aims to lower prices, expand choices for customers, and secure the long-term future of unionized grocery jobs.
The Merger's Sale Plan
Kroger will sell the Haggen banner to C&S Wholesale Grocers under the new agreement, along with the QFC, Mariano's, and Carrs chains as previously planned, and retained stores by Krogers under those banners will be rebranded under one of the chains retained by the expanded retailer.
C&S Wholesale Grocers will also obtain licenses for the Albertsons banner in California and Wyoming, as well as the Safeway banner in Arizona and Colorado. Eric Winn, CEO of C&S Wholesale Grocers, expressed confidence in the expanded divestiture package, believing it will provide the necessary stores, supporting assets, and experienced operators to ensure continued success in serving their communities for generations to come.
Kroger and Albertsons collectively have over 700,000 workforce in approximately 5,000 stores across 49 states, which generate more than $200 billion in revenue when combined annually.
The FTC refrained from giving comments when asked about Kroger, Albertsons, and C&S Wholesale Grocers' new agreement.
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