MONEY

Kroger, Albertsons alter their merger plans, include Haggen in new deal

Apr 22, 2024, 9:54 AM | Updated: 4:19 pm

Image: The exterior of a Kroger grocery store in Novi, Michigan, can be seen Jan. 23, 2021....

The exterior of a Kroger grocery store in Novi, Michigan, can be seen Jan. 23, 2021. (File photo: Ed Pevos, Ann Arbor News via AP)

(File photo: Ed Pevos, Ann Arbor News via AP)

Supermarket chains Kroger, which operates Fred Meyer and QFC stores and Albertsons, which owns Safeway, said Monday they will sell off more stores to ease antitrust concerns over their proposed $24.6 billion merger.

The combined companies say they now plan to sell 579 stores across several states for $2.9 billion, letting go of the most in the state of Washington: 124. That’s 20 more stores than their previous merger plan which the Federal Trade Commission (FTC) and the state of Washington are suing to stop.

The company tapped to buy the stores is C&S Wholesale Grocers, a New Hampshire-based company that includes the Piggly Wiggly Supermarkets chains as part of its portfolio.

Under the initial divestiture plan, announced in September, C&S had planned to purchase 413 stores for $1.9 billion.

Kroger, which would be the acquiring entity in the merger of the giant chains, would sell the Haggen banner. C&S would also license the Albertsons banner in California and Wyoming and the Safeway banner in Arizona and Colorado. C&S would also get access to some private-label brands in the stores. Under the proposal, C&S would keep all of the stores open and honor any labor agreements.

“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 CEO Eric Winn said in a statement.

Ferguson has previously expressed fear about the merger

KIRO Newsradio has reached out to Washington State Attorney General Bob Ferguson to see if it’s a big enough move to allay his fears about the merger.

“If Kroger and Albertson’s merge, they will – simply put – dwarf the competition,” Ferguson said when he filed a lawsuit on behalf of the state in January. “Shoppers will have fewer choices and less competition, and that results in higher prices.”

Ferguson has claimed C&S is a small operation he predicts would be quickly overwhelmed by competition from the newly combined Kroger-Albertsons stores.

He compared it to when Albertsons merged with Safeway in 2015. Under a divestiture plan, they sold 146 stores to regional supermarket chain Haggen, which went bankrupt a year later.

The FTC also said the initial plan to divest 413 stores to C&S was “inadequate” and would give C&S a hodgepodge of unconnected stores and brands, leaving it ill-equipped to compete with a combined Kroger and Albertsons.

Kroger, Albertsons try to bolster their case

In a news release issued Monday, Kroger and Albertsons bolstered the case for C&S saying the companies’ divestiture package provides enough corporate and office infrastructure to ensure the company can operate the stores “competitively and cohesively.”

“Importantly,” the statement continued, “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.”

Kroger and Albertsons first announced their proposed merger in October 2022. The companies have said they plan to close the deal in the first half of Kroger’s fiscal year.

Number of stores to be sold in the Kroger-C&S Wholesale plan

State Number of stores Chains affected
1. Washington 124 Albertsons and Kroger stores
2. Arizona 101 Albertsons stores
3. Colorado 91 Albertsons stores
4. California 63 Albertsons stores
5. Oregon 62 Albertsons and Kroger stores
6. Illinois 35 Albertsons and Kroger stores

Contributing: The Associated Press; Steve Coogan, MyNorthwest

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