Kroger-Albertsons Merger Delayed
The merger of two of the largest grocery stores in the United States is no longer expected to be completed in March. According to a joint statement made by The Kroger Co., Albertsons Cos. Inc. and C&S Wholesale Grocers LLC, their proposed merger and divestiture plan is now anticipated to close in the first half of Kroger’s fiscal 2024, which ends on Aug. 17, due to continuing dialog with regulators.
“While this is longer than we originally thought, we knew it was a possibility and our merger agreement and divestiture plan accounted for such potential timing,” read the statement. “We remain committed to closing the transaction and providing the meaningful and measurable benefits that we promised when we originally announced the transaction."
On Oct. 13, 2022, Albertsons entered into a merger agreement with Kroger. In connection with the merger, both companies entered into a definitive agreement with C&S for the sale of select stores, banners, distribution centers, offices and private label brands to the wholesaler.
News of the delay comes as the $24.6 billion grocery deal encounters even more pushback. Washington state Attorney General Bob Ferguson filed a lawsuit on Jan. 15 to block the proposed merger.
In the suit filed in King County Superior Court, Ferguson argued that the multibillion-dollar deal would harm consumers and raise prices, The Seattle Times reported.
[Read more: "DOJ, FTC Deliver on NGA's Call for Enhanced Scrutiny of Mergers"]
However, the companies have continued to stress that Kroger's merger with Albertsons will mean lower prices and more choices for more customers. Kroger said that it will invest $500 million to reduce prices beginning on day one, as well as put up an incremental $1.3 billion to enhance the customer experience. The retailer emphasized that the merger will mean more fresh, affordable food is available to more people in more communities.
Last month, the International Brotherhood of Teamsters called on the Federal Trade Commission (FTC) to reject the sale of assets of Kroger or Albertsons Cos. to C&S as proposed in the companies' divestiture plan, saying that the deal puts members’ jobs at risk.
C&S said that it's committed to recognize the union workforce and maintain all collective bargaining agreements, as well as to retaining front-line employees.
Kroger also said it will protect union jobs, with no store closures or front-line associates laid off as a result of the merger. It will invest an incremental $1 billion to raise wages and comprehensive benefits for all associates post-close. Also post-close, Kroger will provide 700,000-plus part- and full-time associates access to its continuing-education benefit, which offers up to $21,000 of reimbursement toward higher learning or continued development.
[Read more: "EXCLUSIVE: Kroger Builds a Workforce for the Future of Grocery"]
Nearly half a million associates of Cincinnati-based Kroger serve more than 11 million customers daily through a digital shopping experience and retail food stores under a variety of banner names. The company is No. 4 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America. Boise, Idaho based Albertsons operates 2,200-plus retail food and drug stores with 1,726 pharmacies, 401 associated fuel centers, 22 dedicated distribution centers and 19 manufacturing facilities. It's No. 9 on The PG 100. Keene, N.H.-based C&S services customers of all sizes, supplying more than 7,500 independent supermarkets, chain stores, military bases and institutions with 100,000-plus products, in addition to operating corporate stores. The company is No. 17 on The PG 100.
