Kroger, Albertsons Plan to Sell These Nearly 600 Stores in $24.6 Billion Merger

Article originally posted on CoStar on July 11, 2024

Grocery giants Kroger and Albertsons Cos. have identified the nearly 600 stores they plan to divest to try to appease and finally win federal approval for their stalled $24.6 billion merger, the biggest deal of its kind in U.S. history.

Kroger, the nation’s largest supermarket chain, and its fellow grocery juggernaut Albertsons jointly identified the exact locations of the stores that would be sold to C&S Wholesale Grocers to allay anti-competitive concerns raised by the Federal Trade Commission about their pending transaction. The list includes 579 stores throughout 18 states and Washington, D.C., as well six distribution centers and one plant, all slated to be bought by Keene, New Hampshire-based C&S.

Washington tops the list of states where stores will be divested, with 124, followed by Arizona, at 101, and Colorado, at 91. California and Oregon are nearly at a tie, at 63 and 62. Those are followed by Illinois, with 35; Texas, 28; Alaska, 18; Nevada, 16; Idaho, 10; New Mexico, nine; Wyoming, five; Maryland and Utah, four each; Virginia, three; Louisiana and Montana, two each; and Delaware and D.C., one each. Kroger didn’t respond to an email from CoStar News seeking a comment.

The release of the names of the exact stores that would be sold comes just over a month before an Aug. 26 federal court hearing is scheduled in Oregon on the FTC’s bid to quash the deal. Cincinnati-based Kroger said in October 2022 it planned to buy Albertsons, based in Boise, Idaho, as the companies seek a grander scale to compete with growing rivals in the grocery sector, including Walmart, Target, Costco, the dollar stores, Amazon and Whole Foods Market, among others. And they pledged that they wouldn’t close any stores or lay off workers.

But the FTC has cast a wary eye on the transaction and in February sued to block it. The two grocery chains had already taking measures to assuage regulators, with plans for C&S to purchase roughly 400 of their stores for $1.9 billion. But the FTC blasted that plan, calling it an “inadequate divestiture offering.”

In response, in April Kroger and Albertsons said they would sell an additional 166 stores to C&S, bringing the total up to 579 locations and the price up to $2.9 billion. But they didn’t release the locations until this week.

Kroger CEO Rodney McMullen wrote a memo to employees in the affected locations, according to Bloomberg News. He told them they will become employees of C&S, and that the new owner has pledged to transfer their pay and health plans and honor collective bargaining agreements, Bloomberg reported.

Nearly 400 of the stores on the list are part of the Safeway and Albertsons chains, with the remainder including Vons, Pavillions, Jewel-Osco, Harris Teeter, Marianos, QFC, Tom Thumb, Haggen, Lucky Store, Market Street, Randalls and Fry’s Food Store locations.

The half-dozen distribution centers on the list include two in Arizona, two in Colorado and one in Washington. A dairy plant in Denver is also slated to be sold to C&S.

Albertsons plans to release its first-quarter earnings on July 23 without holding a conference call on the results.