Kroger and Albertsons have increased the number of stores they plan to divest to grocery company C&S Wholesale Grocers as part of a new package the companies put together in efforts to get regulatory approval for their planned merger.
In the latest divestiture package, the company plans to sell off 579 stores, an increase of 166 from the previously planned divestiture package announced last September. The number of Colorado stores divested in the deal would increase from 52 to 91, but Kroger won’t yet say which specific stores are included in the deal, and the company won’t comment on how the divestiture package and potential merger might affect Montrose’s grocery stores: two City Market locations (owned by Kroger) and one Safeway location (owned by Albertsons).
Under the amended agreement, C&S Wholesale Grocers will license the Albertsons banner in California and Wyoming and the Safeway banner in Arizona and Colorado, according to a statement from Kroger.
“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,” the statement reads.
The announcement of the Kroger-Albertsons merger came in 2022, and since then, the supermarket giants have run into some roadblocks. Most recently, the U.S. Federal Trade Commission filed a suit to block the merger in February That development came less than a week after Colorado Attorney General Phil Weiser, and other state attorneys general filed suit to do the same.
The FTC charged in its suit that the proposed deal would eliminate competition between Kroger and Albertsons, leading to higher prices for groceries for Americans and lower quality products and service. The suit also detailed potential harm to employees’ wages, benefits and working conditions.
The FTC said the previous divestiture package, amounted to “a hodgepodge of unconnected stores, banners, brands, and other assets that Kroger’s antitrust lawyers have cobbled together and falls far short of mitigating the lost competition between Kroger and Albertsons.”
The FTC stated “C&S would face significant obstacles stitching together the various parts and pieces from Kroger and Albertsons into a functioning business—let alone a successful competitor against a combined Kroger and Albertsons.”
C&S would pay $2.9 billion for the stores and brands, Kroger said in a statement.
From Kroger, which would be acquiring Albertsons for close to $25 billion in the merger:
“The amended divestiture package responds to concerns raised by federal and state antitrust regulators regarding the original agreement. The enhanced divestiture package includes a modified and expanded store set and additional non-store assets to further enable C&S to operate competitively following the completion of the proposed merger. The companies believe the amended divestiture package will bolster their position in regulatory challenges to the proposed merger, including pending court proceedings.”
Kroger and Albertsons are the second and third largest supermarket retailers in the country, with around 5,000 combined stores and more than $700,000 employees.
Kroger and Albertsons court date with the FTC is slated for August.
Justin Tubbs is the Montrose Business Times editor. He can be reached by email at justin@montrosebusinesstimes.com or by phone at 970-765-0915 or mobile at 254-246-2260.
