USA’s Kroger and Albertsons to expand divestiture plans to secure regulatory approval for merger

USA – Kroger and Albertsons, two American food and drug retailers, have unveiled plans to divest additional stores to C&S Wholesale Grocers as part of their efforts to obtain regulatory approval for their proposed $25 billion merger.

The decision comes after the US Federal Trade Commission (FTC) moved to block the merger between Kroger and Albertsons earlier this year, citing concerns over its potential impact on staff and customers.

Initially, the two retailers had proposed selling over 400 stores to C&S Wholesale Grocers to address regulatory concerns.

However, the FTC deemed this plan inadequate, criticizing it as a “hodgepodge” of unconnected assets.

 In response, Kroger and Albertsons have now agreed to sell an additional 166 outlets to C&S Wholesale Grocers, bringing the total number of stores to be divested to 579.

In a joint statement, the retailers emphasized that the revised agreement addresses concerns raised by federal and state antitrust regulators – they believe that the expanded divestiture package will strengthen their position in regulatory challenges to the proposed merger, including pending court proceedings.

The legal battle between the FTC and the retailers is scheduled for August, with Attorneys General from eight US states and the District of Columbia joining the federal lawsuit.

Despite the regulatory hurdles, Kroger Chairman and CEO Rodney McMullen remains optimistic about the merger’s potential benefits.

As part of the new deal, Kroger will sell off several banners, including Haggen, QFC, Mariano’s, and Carrs, to C&S Wholesale Grocers.

 Stores retained by Kroger will be rebranded under one of the chains retained by the enlarged retailer. 

Eric Winn, CEO of C&S Wholesale Grocers, expressed confidence that the expanded divestiture package will ensure the continued success of the divested stores in serving their communities.

Kroger and Albertsons, with over 700,000 employees and nearly 5,000 stores across 49 states, generate a combined annual revenue exceeding $200 billion.

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