Business

Kroger, Albertsons Unveil Stores to Be Divested Ahead of Trial

A Kroger grocery store in Covington, Kentucky, US, on Sunday, June 2, 2024. Kroger Co. is expected to release earnings figures on June 20. (Jeffrey Dean/Bloomberg)

(Bloomberg) -- Kroger Co. released the full list of stores, distribution centers and plants it plans to divest to secure regulatory approval for the proposed merger with Albertsons Cos. 

The companies have started notifying staff at affected locations, Chief Executive Officer Rodney McMullen wrote in a memo to employees on Tuesday. Impacted workers will become employees of C&S Wholesale Grocers after the transaction closes, McMullen wrote, and will remain as Kroger and Albertsons staff until then. C&S has committed to transferring pay and health plans and assuming all collective bargaining agreements, he added.  

The grocers, which announced their $24.6 billion merger in October 2022, are sharing the list ahead of a trial expected in August that will decide the outcome of their deal. Kroger and Albertsons agreed to sell a package of stores and other facilities to C&S, boosting the number to 579 from 413 in April after the Federal Trade Commission blocked the tie-up.

The list includes 124 stores in Washington state, 101 in Arizona, 91 in Colorado and 63 in California, among others. The package also includes a dairy plant in Colorado as well as six distribution centers across four states. 

Together, Kroger and Albertsons currently have nearly 5,000 stores across the country, including banners like Kroger, Ralphs, and Harris Teeter as well as Albertsons, Safeway, Acme and Jewel-Osco. 

Kroger and Albertsons say they need the merger to compete with larger, non-unionized rivals Amazon.com Inc., Walmart Inc. and Costco Wholesale Corp. The companies have pledged to invest $500 million to cut prices and $1 billion to raise worker wages and benefits, in addition to $1.3 billion to improve Albertsons stores.  

The FTC’s complaint alleges that the deal would harm consumers by eliminating competition on prices and quality, making the combined firm less likely to improve its services by offering flexible hours and pickup services. It also would give the grocers increased leverage over workers, slowing wage growth and worsening benefits, according to the complaint.

The FTC has also alleged that C&S would face significant challenges stitching together the various stores acquired from the grocers and deems the grocers’ proposed divestitute package inadequate. In 2015, the agency allowed Albertsons to buy Safeway after it sold 168 stores, the bulk of them to Washington state grocer Haggen Holdings LLC. Less than a year later, Haggen filed for bankruptcy and Albertsons bought back a number of the stores.

The list of stores to be sold to C&S includes dozens of locations that Albertsons reacquired, including 12 Haggen stores in Washington.

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