Kroger, Albertsons update divestiture plan

The grocery chains have increased the number of stores they plan to divest (166 more) and added other assets to the deal to gain regulatory approval for merger
Kroger, Albertsons update divestiture plan

Kroger and Albertsons Cos have amended the asset sale agreement with C&S Wholesale Grocers to include an extra 166 stores in a bid to get regulatory approval for their proposed $25 billion (€23.5 billion) merger. C&S will pay Kroger an all-cash consideration of about $2.9 billion, up from the previous payout of $1.9 billion (€1.8 billion). With the inclusion of the additional 166 stores, the updated divestiture package will see a total of 579 stores being sold and operated by the new owner, C&S.

Kroger and Albertsons have been looking to offload stores to address regulatory concerns that have risen since they first announced the merger in October 2022. In February, the US Federal Trade Commission and eight states sued to block the deal, saying it would boost grocery prices for millions of Americans. Under the amended agreement, Kroger will also sell the Haggen banner to C&S.

Kroger and Albertsons reiterated Monday their stance that their merger will result in lower grocery prices, give consumers more choices, and support unionized grocery jobs. They also continued to promote C&S as a strong buyer for the divested assets, calling the wholesaler a “well-capitalized competitor” entering new geographies.

The updated divestiture plan revises the targeted geographic areas and adds Harris Teeter stores in Delaware, marking the 17th state C&S would enter as a grocery retailer if the deal goes through.

Kroger and Albertsons have tweaked the number of divested stores across 18 states and Washington, D.C. Some of those changes are sizable increases, such as adding 77 more stores in Arizona, 39 more stores in Colorado, and 20 more stores in Washington state to the deal. Those last two states have been vocal in criticizing the merger.

Under the amended agreement, C&S would license the Albertsons banner in California and Wyoming and the Safeway banner in Arizona and Colorado. Kroger said it plans to re-banner stores currently under those banners in those states that it intends to hold onto. C&S would also pick up the Haggen banner, which runs 15 stores in Washington and has more than 2,000 workers, in addition to the QFC, Mariano’s, and Carrs banners the company was already slated to buy.

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