Kroger, Albertsons Sweeten C&S Deal to Save Merger

Retailers sell 166 more stores to address regulator concerns and stay on track with proposed merger

4/22/2024

Kroger and Albertsons have amended the original divestiture package with C&S Wholesale Grocers, adding more stores and corporate sites to the sell-off plan.

As scrutiny about their merger has intensified, The Kroger Co. and Albertsons Cos. are taking new steps to get the deal approved. The companies announced that they are adding 166 more stores to the list of locations to be sold off to C&S Wholesale Grocers.

With this update, 579 stores will be spun off to C&S. New to that arrangement is the Haggen banner, which will now be part of C&S.

Breaking it down, the changes to the initial divestiture package include locations in the following states:

124 Albertsons Cos. and Kroger stores in Washington
63 Albertsons Cos. stores in California
91 Albertsons Cos. stores in Colorado
62 Albertsons Cos. and Kroger stores in Oregon
30 Albertsons Cos. stores in Texas and Louisiana
101 Albertsons Cos. stores in Arizona
16 Albertsons Cos. stores in Nevada
35 Albertsons Cos. and Kroger stores in Illinois
18 Albertsons Cos. stores in Alaska
10 Albertsons Cos. stores in Idaho
9 Albertsons Cos. stores in New Mexico
11 Albertsons Cos. stores in Montana, Utah and Wyoming
9 Harris Teeter stores in Maryland, Virginia, Delaware and Washington, D.C.

Additionally, the updated plan includes increased distribution capacity through a combination of different and larger facilities along with expanded transition services agreements to support C&S and the addition of one dairy facility. The corporate and office infrastructure provided to C&S will be expanded as well.

According to Kroger’s Chairman and CEO Rodney McMullen, the amended divestiture deal reflects the concerns voiced by regulators such as the Federal Trade Commission, which filed suit in February to block the merger.

"We have reached an agreement with C&S for an updated divestiture package that maintains Kroger's commitments to customers, associates and communities, addresses concerns raised by regulators, and will further ensure that C&S can successfully operate the divested stores as they are operated today," he 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. Our proposed merger with Albertsons will bring lower prices and more choices to more customers and secure the long-term future of unionized grocery jobs."

Eric Winn, CEO of C&S, also weighed in. "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," he declared. "C&S is a leader in the grocery industry, and we are excited for this expansion of our current retail business, which is a key part of our long-term growth strategy. We look forward to welcoming storied banners, quality private label brands, and a team of experienced retail associates into the C&S family.”

Burt P. Flickinger III, managing director of New York City-based Strategic Resource Group, told Progressive Grocer that the refreshed divestiture is a good-faith move by the grocers. “Our professional view at Strategic Resource Group is that the deal would be successful even with the original plan, because C&S has the ideal combination of family management and professional management,” he asserted, adding, “It should be more than enough (for federal approval), but the most important consideration is that the FTC should not only look at its current decisions but at its prior decisions that were overly aggressive and wound up contributing to regional supermarket chains filing for bankruptcy.”

Nearly half a million associates of Cincinnati-based Kroger serve more than 11 million customers daily through a digital shopping experience and retail food stores under a variety of banner names. The company is No. 4 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America. Boise, Idaho based Albertsons operates 2,200-plus retail food and drug stores. It's No. 9 on The PG 100. Keene, N.H.-based C&S services customers of all sizes, supplying more than 7,500 independent supermarkets, chain stores, military bases and institutions with 100,000-plus products, in addition to operating corporate stores. The company is No. 17 on The PG 100.