Large US grocery chains Kroger, Albertsons selling 400-plus locations in order to make their merger

(As originally published with additional photos, Fri, September 8th 2023, 7:03 PM EDT)

(TND) — Kroger and Albertsons will sell more than 400 stores and other assets to get government permission for their merger.

The sale is expected to help the companies convince antitrust regulators to approve uniting two of the nation’s largest grocery chains.

Along with the 413 stores are the brand names QFC, Mariano’s and Carrs; the private label brands Debi Lilly Design, Primo Taglio, Open Nature, ReadyMeals, and Waterfront Bistro; and eight distribution centers and two offices.

The price tag is about $1.9 billion for buyer C&S Wholesale Grocers.

The fuel centers outside and the pharmacies inside the divested stores will remain with the stores and continue to operate.

It has been nearly a year since Kroger and Albertsons agreed to merge. The deal, which was announced in October 2022, will see Cincinnati-based Kroger pay $20 billion for Albertsons and also assume $4.7 billion of Albertsons’ debt. The companies want the deal to close early next year.

Grocery store profits have been hurt by rising prices for everything from food to workers.

The big grocery chains say they have to get even bigger to compete with Walmart, Amazon, and other major companies that are newer to the grocery business.

Significant consolidation is already taking place. Last month, Aldi announced its plan to buy 400 Winn-Dixie and Harveys supermarkets in the South.

If the big sale to C&S is not big enough to get government clearance for the merger, Kroger could force C&S to buy up to 237 more stores. C&S would pay Kroger an amount to be determined if that happens.

C&S was founded back in 1918. It’s a supplier to more than 7,500 independent grocery supermarkets, retail chain stores, and military bases. C&S also runs some Grand Union and Piggly Wiggly stores in the Midwest and Carolinas.

Kroger doesn’t expect any labor issues with the merger.

“C&S commits to honoring all collective bargaining agreements which include industry-leading benefits, retaining frontline associates, and further investing for growth,” Kroger chairman and CEO Rodney McMullen said in a statement on Friday.

The Kroger Co. also made news on Friday by agreeing to settle lawsuits over the U.S. opioid crisis and will pay up to $1.4 billion over 11 years. Those payouts will include up to $1.2 billion for state and local governments where it operates, $36 million to Native American tribes, and about $177 million to cover lawyers’ fees and costs.

Right now, Kroger has stores in 35 states. The chain is virtually everywhere except the Northeast, the Northern Plains, and Hawaii.

Over the past eight years, prescription drug manufacturers, wholesalers, consultants, and pharmacies have proposed or finalized opioid settlements totaling more than $50 billion.

The companies also agreed to change their business practices regarding powerful prescription painkillers, consenting to restrictions on marketing and using data to catch overprescribing.

Jayne Conroy, a lead lawyer for the governments suing the companies, said the noneconomic terms have not been finalized in the Kroger case, but they’ll be similar to other companies’ agreements.

The Associated Press contributed to this report.