Kroger and Albertsons have set out plans to sell more stores to C&S Wholesale Grocers in a bid to get regulatory clearance for their $25bn retail mega-merger.
In September last year, the two retailers set out a plan to sell more than 400 stores to C&S Wholesale Grocers to secure regulatory approval for a transaction first announced in October 2022.
However, in February, the US Federal Trade Commission moved to block the merger of Kroger and Albertsons, two of the largest grocers in the US.
The FTC said the deal would be to the detriment of the retailers’ staff and customers, arguments dismissed by Kroger and Albertsons.
The competition watchdog also insisted the plan for store disposals drawn up last September was “inadequate” and amounted to “a hodgepodge of unconnected stores, banners, brands, and other assets that Kroger’s antitrust lawyers have cobbled together”.
Today, Kroger and Albertsons said they would sell another 166 outlets to C&S Wholesale Grocers. The new deal means 579 stores would be offloaded.
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In a statement, the retailers said the agreement “responds to concerns raised by federal and state anti-trust regulators”. They argued the new package would “bolster their position in regulatory challenges to the proposed merger, including pending court proceedings”.
The FTC’s legal bid to stop the deal is slated for August. Attorneys General from eight US states, as well as the District of Columbia, have joined the FTC’s 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 new deal, Kroger will sell the Haggen banner to C&S Wholesale Grocers, as well as the QFC, Mariano’s and Carrs chains as originally agreed. Stores under those banners kept by Kroger will be renamed as one of the chains retained by the enlarged retailer.
The agreement will also see C&S Wholesale Grocers license 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,” C&S Wholesale Grocers CEO Eric Winn said.
Kroger and Albertsons have more than 700,000 employees in nearly 5,000 stores across 49 states. They generate a combined annual revenue in excess of $200bn.
The FTC declined to comment on the new agreement between Kroger, Albertsons and C&S Wholesale Grocers. Just Food has asked the United Food and Commercial Workers International Union, which has opposed the deal, for comment.
