USA – Grocery retail giants Kroger and Albertsons has revealed plans to sell more than 400 stores, distribution centers, office sites, and private-label brands to C&S Wholesale Grocers, a prominent US wholesaler in an aim to secure regulatory approval for their proposed mega-merger.
The proposed transaction represents a significant development in the ongoing efforts to create one of the largest grocery retailers in the United States.
The merger between Kroger and Albertsons was initially unveiled in October of the previous year, with both companies eager to capitalize on their combined market presence.
However, the merger faced regulatory scrutiny and encountered political opposition in the US, necessitating strategic divestitures to address these concerns.
Under the terms of the agreement announced C&S Wholesale Grocers is set to acquire 413 stores, eight distribution centers, two office sites, and five private-label brands.
These assets are spread across 17 US states and the District of Columbia. Notably, the transaction also includes the acquisition of the QFC, Mariano’s, and Carrs retail banners, although not all stores bearing these brand names will be transferred.
The major component of the deal involved the transfer of the SpinCo stores, which were originally earmarked for divestiture when Kroger and Albertsons initially proposed their merger.
The combined Kroger-Albertsons entity will retain stores that are not part of this agreement, and they will be rebranded accordingly.
According to Rodney McMullen, Chairman and CEO of Kroger, Kroger and Albertsons had undertaken a thorough process to find a “well-capitalized buyer” that would ensure the continued service to communities by divested stores.
He praised C&S Wholesale Grocers for its experience in food retail and distribution, as well as its financial strength to support the business for the long term.
Additionally, the financial aspect of the deal sees C&S Wholesale Grocers set to pay Kroger approximately US$1.9 billion, with the potential for further expansion of the agreement.
Kroger noted that up to 237 additional stores may need to be sold to secure regulatory clearance, with the corresponding increase in compensation to C&S Wholesale Grocers if more stores are included.
Eric Winn, COO of C&S Wholesale Grocers, who is set to become the company’s CEO next month, expressed excitement about expanding into the retail market, which he sees as vital for their growth and future success.
Albertsons CEO Vivek Sankaran also highlighted C&S Wholesale Grocers’ capabilities and financial strength, assuring that the divested stores will continue to thrive and serve their communities.
He emphasized their commitment to supporting associates and honoring existing collective bargaining agreements.
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