Kroger and Albertsons, two major supermarket operators, have made a significant announcement. They plan to sell 413 stores for a total of $1.9 billion as part of their merger, which is valued at $25 billion. This move is aimed at addressing concerns raised by antitrust regulators at the Federal Trade Commission.
The stores will be sold to C&S Wholesale Grocers, a company based in New Hampshire. Following this transaction, C&S Wholesale Grocers will expand its retail presence to over 500 stores, servicing nearly 7,500 supermarkets across the country. Most of C&S Wholesale’s retail operations are comprised of over 100 Piggly Wiggly stores located in Wisconsin and the Carolinas, along with 11 Grand Union stores in New York and Vermont. Additionally, the company supplies and franchises the Piggly Wiggly brand to independent owners, extending its reach to more than 500 supermarkets nationwide.
It’s worth noting that this deal will impact a substantial number of employees at Kroger and Albertsons, although specific details and estimates have not been provided by the companies.
As part of this divestiture agreement, Kroger will sell two of its store banners: Marianno’s in Chicago and QFC in the Pacific Northwest. Albertsons, on the other hand, will discontinue the Carrs nameplate in Alaska and grant exclusive licensing of its own name in Arizona, California, Colorado, and Wyoming. Kroger has also mentioned that some stores will undergo rebranding as part of this deal.
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The affected states and regions include:
- Washington state with 104 Albertsons Cos. and Kroger stores.
- California with 66 Albertsons Cos. and Kroger stores.
- Colorado with 52 Albertsons Cos. stores.
- Oregon with 49 Albertsons Cos. and Kroger stores.
- Texas and Louisiana with 28 Albertsons Cos. stores.
- Arizona with 24 Albertsons Cos. stores.
- Nevada with 15 Albertsons Cos. stores.
- Illinois with 14 Kroger stores.
- Alaska with 14 Albertsons Cos. stores.
- Idaho with 13 Albertsons Cos. stores.
- New Mexico with 12 Albertsons Cos. stores.
- Montana, Utah, and Wyoming with 12 Albertsons Cos. stores.
- Maryland, Virginia, and Washington, D.C. with 10 Harris Teeter stores.
It’s important to note that this deal is contingent on the successful completion of the Kroger and Albertsons merger. Additionally, C&S Wholesale may need to acquire an additional 237 stores from Kroger and Albertsons to meet regulatory requirements.
As part of this transaction, Kroger and Albertsons are also selling eight distribution centers, two offices, and five private-label brands.
Both Kroger and Albertsons, along with C&S Wholesale, are emphasizing their commitment to preserving existing union contracts and ensuring that this merger will not lead to store closures or layoffs. They have actively sought a strong and viable competitor to take over the stores that need to be divested due to antitrust concerns.
The deal is a significant development in the retail industry and comes after Kroger’s proposed $25 billion takeover of Albertsons. This merger has faced opposition from consumer and union groups, who argue it could harm competition and workers. Regulators are currently evaluating the merger, and Kroger executives have indicated their intention to defend the deal in court.
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In other news, Kroger reported a $180 million loss on sales of $33.9 billion, missing Wall Street’s expectations. This loss is linked to a $1.4 billion charge related to an opioid settlement, which includes a $1.2 billion payment to states and other governments, as well as $177 million in attorney fees and costs. Excluding one-time items, Kroger’s profit exceeded analysts’ forecasts, but its sales fell short of expectations. Identical store sales excluding fuel increased by 1% during the fiscal quarter that ended on August 12, a key metric for measuring sales growth.
Kroger operates a vast network of stores across the United States and continues to be a major player in the grocery industry.