The Kroger Co. (NYSE: KR) and Albertsons Companies Inc. (NYSE: ACI) plan to divest an additional 166 supermarkets to gain regulatory approval of their proposed $24.6 billion merger.
The Kroger-Albertsons transaction was announced last October, but in February a lawsuit was filed by the Federal Trade Commission, eight states and the District of Columbia to stop the deal that would create a combined company with more than 4,000 stores. A district court hearing has been scheduled for August on the FTC’s bid for a preliminary injunction to block the merger.
The initial agreement was for the offloading of 413 locations to C&S Wholesale Grocers LLC, which operates the supermarket chains Piggly Wiggly and Grand Union, and now the total number of stores was raised to 579 outlets. The majority of the stores to be sold to C&S are concentrated in Washington State (124 Albertson and Kroger stores), Arizona (101 Albertson stores), Colorado (91 Albertsons stores), California (63 Albertsons stores) and Oregon (62 Albertsons and Kroger stores).
“We have reached an agreement with C&S for an updated divestiture package that maintains Kroger’s commitments to customers, associates and communities, addresses concerns raised by regulators, and will further ensure that C&S can successfully operate the divested stores as they are operated today,” said Rodney McMullen, Kroger’s chairman and CEO. “Importantly, the updated divestiture plan continues to ensure no stores will close as a result of the merger and that all frontline associates will remain employed, all existing collective bargaining agreements will continue, and associates will continue to receive industry-leading health care and pension benefits alongside bargained-for wages. Our proposed merger with Albertsons will bring lower prices and more choices to more customers and secure the long-term future of unionized grocery jobs.”
“We are confident this expanded divestiture package will provide the stores, supporting assets and expert operators needed to ensure these stores continue to successfully serve their communities for many generations to come,” added Eric Winn, CEO of C&S. “C&S is a leader in the grocery industry, and we are excited for this expansion of our current retail business, which is a key part of our long-term growth strategy. We look forward to welcoming storied banners, quality private label brands, and a team of experienced retail associates into the C&S family. This amended agreement enables C&S’s heritage of selection, value and customer service to continue our legacy of braggingly happy customers.”