In an effort to quell concerns raised by the federal government, supermarket giants Kroger and Albertsons have announced plans to sell more of their stores as part of their proposed merger. The companies will now offload 579 Kroger and Albertsons stores in overlapping markets to C&S Wholesale Grocers, a New Hampshire-based grocery supplier and operator, for a hefty $2.9 billion.
This expanded divestiture plan marks a significant increase from the initial agreement announced in September 2022, which involved the sale of 413 stores to C&S for $1.9 billion. The updated plan includes the sale of Kroger’s Haggen banner to C&S, as well as licensing agreements for the Albertsons banner in California and Wyoming and the Safeway banner in Arizona and Colorado. C&S will also gain access to certain private-label brands in the stores.
The move comes in response to an antitrust lawsuit filed by the U.S. Federal Trade Commission (FTC) in February 2023, which sought to block the merger between Kroger and Albertsons. The FTC argued that the lack of competition resulting from the merger would lead to higher grocery prices and lower wages for workers. The initial divestiture plan was deemed “inadequate” by the FTC, as it would have left C&S with a fragmented collection of stores and brands, hindering its ability to compete effectively with the combined Kroger and Albertsons entity.
Under the revised plan, C&S has pledged to keep all the acquired stores open and honor existing labor agreements. “We are confident that this expanded divestiture package will provide the stores, supporting assets, and expert operators needed to ensure these stores continue to serve their communities successfully for many generations to come,” said Eric Winn, CEO of C&S.
Kroger and Albertsons initially announced their merger plans in October 2022, citing the need to better compete with industry giants like Walmart and Amazon. The companies maintain that the merger will not only enhance their competitive position but also lead to cost savings, which can be passed on to consumers. However, the FTC’s concerns and the subsequent expansion of the divestiture plan suggest that the road to regulatory approval may not be entirely smooth for Kroger and Albertsons.
