Kroger Reconsidering Drug Store Purchase?

The Kroger Co. may have changed its mind on acquiring some of the 650 stores that Walgreens and Rite Aid need to divest as a condition of their $17 billion merger, according to media reports.

Kroger may pass on the deal after the Federal Trade Commission informed the Cincinnati-based retailer that it could not purchase the stores and close them to move the pharmacy operations inside existing grocery stores, the New York Post reported. The merger would create the nation's largest pharmacy chain.

A Kroger spokesperson declined to comment, telling PG the company does not comment on rumor or speculation.

Kroger, the country’s largest traditional grocer, expressed interest in the locations after several private equity firms passed on them, reportedly deeming them too spread out geographically and not able to profitably compete, the Post reported..

Locations Key to Fresh Expansion?

Meanwhile, at least one analyst is speculating that Kroger could open up to 300 Main & Vine stores across the country, replicating the fresh-centric market concept the retailer launched in February near Seattle.

Vince Sinisi, a Morgan Stanley analyst, believes Kroger could open as many as 15 Main & Vine stores in its hometown area of Greater Cincinnati, where demographics, market size and demand for organic food make the concept a good fit, the Cincinnati Business Courier reported.

Kroger’s potential acquisition of Rite Aid locations, and moving their pharmacy operations into existing supermarkets, would free up those sites to be converted to Main & Vine stores. The pilot Main & Vine measures 30,000 square feet, significantly smaller than most Kroger supermarkets.

However, the FTC’s latest declaration would make such a strategic maneuver impossible.

Kroger CEO Rodney McMullen told the Courier earlier this year that Kroger could expand Main & Vine based on what it learns from the pilot store.