Soon after the U.S. Federal Trade Commission sued to block the USD 24.6 billion (EUR 23 billion) proposed merger between retailers Kroger and Albertsons, the two companies said that they plan to divest more stores than originally planned in an attempt to get the merger passed.
Cincinnati, Ohio, U.S.A.-based The Kroger Co. and Boise, Idaho, U.S.A.-based Albertsons Companies have amended their divestiture agreement with C&S Wholesale Grocers to sell 166 additional stores to C&S.
Now, if the merger goes through, the companies will sell 579 stores to Keene, New Hampshire, U.S.A.-based C&S.
In exchange, C&S will pay Kroger an all-cash consideration of approximately USD 2.9 billion (EUR 2.7 billion), including customary adjustments.
Kroger and Albertsons will continue the sale of the QFC, Mariano’s, and Carrs banner names but will now also sell the Haggen brand to C&S.
“Stores currently under these banners that are retained by Kroger will be re-bannered into one of the retained Kroger or Albertsons Cos. banners following the close of the transaction with C&S,” the two retailers said.
The agreement will also see C&S licensing the Albertsons banner in California and Wyoming, as well as the Safeway brand in Arizona and Colorado. In these states, Kroger will rebrand retained Albertsons and Safeway stores following the closing of the merger, and then Kroger will maintain the Albertsons and Safeway banners in the remaining states.
The amended divestiture package “responds to concerns raised by federal and state antitrust regulators regarding the original agreement,” Kroger and Albertsons said. “The companies believe the amended divestiture package will bolster their position in regulatory challenges to the proposed merger, including pending court proceedings.”
In the FTC’s lawsuit seeking to block the merger, which was originally proposed in October 2022, the commission argued the tie-up would lead to “higher prices for groceries and other essential household items for millions of Americans.”
Policymakers throughout the country have voiced similar concerns.
Kroger Chairman and CEO Rodney McMullen said the new agreement will address those concerns.
“[The agreement] further ensures that C&S can successfully operate the divested stores as they are operated today,” McMullen said. “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.”
The amended agreement also maintains the divestiture to C&S of private-label seafood brand Waterfront Bistro, along with Debi Lilly Design, Primo Taglio, Open Nature, and ReadyMeals.
