Are Kroger and Albertsons Closer to Store Divestitures?

Sources claim retailers are moving ahead with potential sale or spinoff of 250-300 stores
Lynn Petrak
Kroger storefront
Kroger and Albertsons are taking steps towards divesting hundreds of stores to quell monopoly concerns, sources said.

While the Federal Trade Commission (FTC) continues to review the proposed merger between The Kroger Co. and Albertsons Cos., reports have emerged that the retailers are following through on a previously-announced divestiture. According to sources cited in a Reuters news article, the companies are planning to sell up to 300 stores in a move to dispel antitrust concerns.

Sources said the stores to be spun off are located throughout the retailers’ respective footprints in different parts of the country. The value of the stores could exceed $1 billion.

The divested stores could be purchased by another large retailer or shifted to a new subsidiary owned by Albertsons shareholders, based on a possible plan shared in late 2022. A legal expert told Reuters that the FTC will keep close tabs on any store sales coming from the divestiture. "[The Albertsons-Safeway deal] will loom large over how these assets are viewed and how the FTC evaluates whether these divestiture packages being offered are viable," remarked Brian Concklin, an antitrust expert and partner at global law firm Clifford Chance.

Since the Kroger-Albertsons merger was announced last fall, there has been a flurry of activity from consumer groups, lawmakers and others to put the brakes on the deal or to at least pump the brakes amid concerns about the size and scope of the new operation at a time of tough competition and high inflation. On Feb. 2, a group of consumers filed an antitrust lawsuit in California seeking to block a $4 billion dividend issued to shareholders by Albertsons ahead of the merger, claiming that the new grocery organization would have monopoly power. A previous restraining order on that dividend was lifted in mid-January, following an appeal denial by the Washington state supreme court.

Serving 60 million households annually nationwide through a digital shopping experience, and almost 2,800 retail food stores under a variety of banner names, Cincinnati-based Kroger is No. 4 on The PG 100, Progressive Grocer’s 2022 list of the top food and consumables retailers in North America. Boise, Idaho-based Albertsons operates more than 2,200 retail stores with 1,700-plus pharmacies, 402 associated fuel centers, 22 dedicated distribution centers and 20 manufacturing facilities in 34 states. The company is No. 9 on The PG 100.

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