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Kroger and Albertsons Unload Hundreds of Stores to Facilitate Merger, Paving the Way for the Largest US Grocery Powerhouse

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Kroger and Albertsons to Sell over 400 Stores and Assets for $1.9 Billion

Clearing the Path for a Merger with Antitrust Regulators

Kroger and Albertsons have announced plans to sell more than 400 stores and other assets for approximately $1.9 billion. This move is aimed at addressing concerns raised by antitrust regulators who are reviewing the proposed merger between the two grocery chains. The merger would bring together two of the largest grocery chains in the United States.

Details of the Sale

  • Kroger will sell 413 stores, including those operating under the QFC, Mariano’s, and Carrs brand names, to C&S Wholesale Grocers.
  • C&S will also acquire several private label brands, such as Debi Lilly Design, Primo Taglio, Open Nature, ReadyMeals, and Waterfront Bistro.
  • Additionally, C&S will gain eight distribution centers and two offices as part of the deal.

Continued Operations

All fuel centers and pharmacies associated with the divested stores will remain operational and be retained by the stores.

About the Merger

Kroger and Albertsons agreed to merge in October, with Kroger offering $20 billion for Albertsons. The deal also includes Kroger assuming $4.7 billion of Albertsons’ debt. The merger is expected to be finalized early next year.

Reasons for the Merger

The grocery chains cite the need to merge in order to effectively compete with major players like Walmart and Amazon, who have entered the grocery business. Rising prices for food and labor have also contributed to significant consolidation in the grocery sector.

Other Recent Developments

Last month, discount grocer Aldi announced plans to acquire 400 Winn-Dixie and Harveys supermarkets in the southern U.S.

Additional Stores and Financial Considerations

Prior to the closing of the deal with C&S, Kroger may require C&S to purchase up to an additional 237 stores in certain regions. The financial details of this additional agreement are yet to be determined.

About C&S Wholesale Grocers

C&S Wholesale Grocers, founded in 1918, is a supplier to independent grocery stores, retail chain stores, and military bases. It currently 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 transitioned employees and their collective bargaining agreements in the past.

Commitment to Employees

Kroger Chairman and CEO Rodney McMullen stated that C&S has committed to honoring all collective bargaining agreements and retaining frontline associates. This includes providing industry-leading benefits and investing for growth.

Market Response

Shares of Kroger Co. rose 5% on Thursday, while Albertsons Cos. saw a 3% increase in share price.

Source: AP News

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