Kroger Co. has unveiled the full list of stores, distribution centers, and plants it plans to divest in order to secure regulatory approval for its proposed merger with Albertsons Cos. In a memo to employees, Chief Executive Officer Rodney McMullen stated that the companies have begun informing staff at affected locations. Following the transaction closure, impacted workers will transition to become employees of C&S Wholesale Grocers while retaining their status as Kroger and Albertsons staff until then. C&S has committed to maintaining pay, health plans, and collective bargaining agreements.
The $24.6 billion merger between Kroger and Albertsons, announced in October 2022, is awaiting a trial in August to determine the fate of the deal. The companies have agreed to sell a package of stores and other facilities to C&S, increasing the number from 413 to 579 after the Federal Trade Commission intervened to block the initial tie-up.
The divestiture list includes 124 stores in Washington state, 101 in Arizona, 91 in Colorado, and 63 in California, among others. Additionally, the package comprises a dairy plant in Colorado and six distribution centers spread across four states.
Currently, Kroger and Albertsons collectively operate nearly 5,000 stores nationwide under banners such as Kroger, Ralphs, Harris Teeter, Albertsons, Safeway, Acme, and Jewel-Osco. The merger is deemed necessary by both companies to effectively compete with non-unionized giants like Amazon, Walmart, and Costco. As part of their commitment, they plan to invest $500 million in price reductions, $1 billion in enhancing worker wages and benefits, and $1.3 billion in upgrading Albertsons stores.
However, the Federal Trade Commission has expressed concerns that the merger could lead to reduced competition, potentially harming consumers by limiting choices and quality. The complaint argues that the combined entity may be less inclined to enhance services, such as offering flexible hours and pickup options, and could exert undue influence over workers, impeding wage growth and benefits. Furthermore, the FTC questions the viability of C&S in integrating the acquired stores and deems the proposed divestiture package insufficient.
In a similar instance in 2015, the FTC permitted Albertsons to acquire Safeway only after the sale of 168 stores, primarily to Washington state grocer Haggen Hol.
