Kroger, Albertsons Add More Stores To C&S Wholesale Deal

The Kroger Co., Albertsons Companies, and C&S Wholesale Grocers have increased the store count in their previously announced divestiture package with the new agreement now calling for 579 stores to be sold to C&S.

The updated agreement adds 166 stores to the deal announced in Sept. 2023 that included Kroger and Albertsons selling more than 400 stores in 17 states and the District of Columbia to C&S. The divestiture of these assets is in connection with the proposed Kroger and Albertsons merger announced in 2022 and is valued at approximately $1.9 billion.

The expanded store count in the proposed sale also comes nearly two months after the Federal Trade Commission’s decision to block the merger between the two grocery giants. The FTC said the proposed deal will eliminate “fierce competition” between the two companies. 

“This supermarket mega merger comes as American consumers have seen the cost of groceries rise steadily over the past few years. Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today,” Henry Liu, director of the FTC’s Bureau of Competition, said when announcing the agency’s opposition to the merger.

While maintaining the sale of QFC, Mariano’s and Carrs banner names to C&S, the amended agreement calls for Kroger to include the Haggen banner as part of the deal. All stores sold will continue operating as is by the new owner. 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.

Under the amended agreement, C&S will license the Albertsons banner in California and Wyoming and the Safeway banner in Arizona and Colorado. In these states, Kroger will re-banner the retained Albertsons and Safeway bannered stores following the closing of the merger. Kroger will maintain the Albertsons and Safeway banners in the remaining states.

According to Kroger officials, the new package responds to concerns raised by federal and state antitrust regulators regarding the original agreement. The companies believe the amended divestiture package will bolster their position in regulatory challenges to the proposed merger, including pending court proceedings.

"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," said Rodney McMullen, Kroger's chairman and CEO. "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 number of stores contained in the divestiture plan by geography is as follows:

• WA: 124 Albertsons Cos. and Kroger stores
• CA: 63 Albertsons Cos. stores
• CO: 91 Albertsons Cos. stores
• OR: 62 Albertsons Cos. and Kroger stores
• TX/LA: 30 Albertsons Cos. stores
• AZ: 101 Albertsons Cos. stores
• NV: 16 Albertsons Cos. stores
• IL: 35 Albertsons Cos. and Kroger stores
• AK: 18 Albertsons Cos. stores
• ID: 10 Albertsons Cos. stores
• NM: 9 Albertsons Cos. stores
• MT/UT/WY: 11 Albertsons Cos. stores
• DC/MD/VA/DE: 9 Harris Teeter stores

The above stores (regardless of banner) will be sold by Kroger to C&S following the closing of the merger with Albertsons Cos.

In connection with the additional stores being conveyed to C&S, the updated divestiture package includes increased distribution capacity through a combination of different and larger facilities as well as expanded transition services agreements to support C&S and the addition of one dairy facility.

The amended divestiture package also expands the corporate and office infrastructure provided to C&S given the increased store set to ensure C&S can continue to operate the divested stores competitively and cohesively. All fuel centers and pharmacies associated with the divested stores will remain with the stores and continue to operate.

The amended agreement maintains the divestiture of private label brands Debi Lilly Design, Primo Taglio, Open Nature, ReadyMeals and Waterfront Bistro to C&S. The revised agreement also provides C&S with access to the Signature and O Organics private label brands.

The updated plan will:

• Extend a competitor to new geographies through the sale of stores to a well-capitalized buyer that is led by seasoned operators with a strong balance sheet and a sound business plan;
• Ensure that no stores will close as a result of the merger;
• Maintain all current collective bargaining agreements, which include industry-leading healthcare and pension benefits, bargained-for wages, and ensuring frontline associates remain employed; and
• Commit to invest in associates and stores for the long term.