Kroger and Albertsons are set to sell over 400 stores and other assets for approximately $1.9 billion. This move aims to pave the way for a merger between the two grocery chains, which are currently under review by antitrust regulators. If approved, the deal would bring together two of the nation’s largest grocery chains.
C&S Wholesale Grocers will acquire the 413 stores, as well as the QFC, Mariano’s, and Carrs brand names. Additionally, Kroger will divest the private label brands Debi Lilly Design, Primo Taglio, Open Nature, ReadyMeals, and Waterfront Bistro. The deal also includes eight distribution centers and two offices.
The fuel centers and pharmacies associated with the divested stores will remain operational and will be retained by the stores.
Kroger and Albertsons reached an agreement to merge in October. Kroger, headquartered in Cincinnati, Ohio, made a $20 billion bid for Albertsons and will also take on $4.7 billion of Albertsons’ debt. The deal is expected to be finalized early next year.
The merger between the two grocery chains is driven by the need to compete with giants like Walmart and Amazon, who have both entered the grocery industry. The grocery sector is experiencing significant consolidation as companies grapple with rising prices for food and labor.
In a similar vein, discount grocer Aldi recently announced its plan to acquire 400 Winn-Dixie and Harveys supermarkets in the southern United States.
Before the deal with C&S is finalized, Kroger may require C&S to purchase up to 237 additional stores in specific regions, subject to securing clearance from the Federal Trade Commission and other governmental bodies. If more stores are included in the agreement, C&S will pay an additional financial amount to Kroger, the exact sum of which has yet to be determined.
Founded in 1918, C&S Wholesale Grocers is a supplier to independent grocery stores, serving over 7,500 independent supermarkets, retail chain stores, and military bases. Currently, it operates Grand Union grocery stores and Piggly Wiggly franchise and corporate-owned stores in the Midwest and Carolinas.
C&S has previous experience with divestitures related to mergers and has successfully managed the transition of union employees and their collective bargaining agreements in the past.
Kroger Chairman and CEO Rodney McMullen stated, “Importantly in our agreement, C&S commits to honoring all collective bargaining agreements, which include industry-leading benefits, retaining frontline associates, and further investing for growth.”
Shares of Kroger Co., based in Ohio, saw a 5% increase, while Albertsons Cos., based in Idaho, rose by 3% following the announcement.
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