Kroger, Albertsons announce sale of additional store to satisfy regulators of merger

While the planned Kroger and Albertsons merger is still in the works, the chains announced on April 22, 2024 that they plan to sell more of their stores in an effort to suppress the federal government’s concerns about their proposed merger.

The companies now plan to sell 579 Kroger and Albertsons stores in markets where they overlap to C&S Wholesale Grocers, a New Hampshire grocery supplier and operator, for $2.9 billion.

"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," Kroger CEO Rodney McMullen said in a press release.

Under the previous divestiture plan, announced in September, C&S had planned to purchase 413 stores for $1.9 billion.

The purchase of the additional 166 stores is in response to the FTC calling the initial plan “inadequate,” giving C&S Wholesale a jumble of disconnected stores that could lead to confusion for customers.

It’s unclear if the new plan will satisfy regulators’ concerns about the impact of the proposed merger on competition. The move comes as companies have been looking to sell stores to address regulators' increasing concerns that the merger will lead to higher prices, store closures and job losses.

Alaska Representative Mary Peltola has been vocal in her opposition to the merger, sending a letter to the FTC requesting the proposed merger between Kroger and Albertsons grocery chains be blocked.

“I haven’t met an Alaskan who is for this merger. I haven’t heard any public testimony in support of this merger,” said Representative Peltola said during a recent telephone interview. “I think Alaskans have been really clear, well-spoken and outspoken in the concerns that we have about selling 14 of the 35 Carrs-Safeway stores,” she said, explaining that many shoppers are attached to their local grocery stores.

Representative Peltola also voiced concern over an apparent lack of transparency when discussing the sales of the stores, saying that no one has identified which stores could possibly be sold going forward.

“Many experts have predicted that if the merger were to go through, the stores most likely to be sold are ones where Carrs-Safeway is right next to a Fred Meyer (store).” She the Carrs-Safeway and neighboring Fred Meyer stores in Wasilla and Palmer.

“Both of those Carrs-Safeways are next to Fred Meyers, and many Alaskans, whether in the Mat-Su, Kenai, or Fairbanks, they price check, looking for the best deals, especially right now, and that’s where they shop…This will have an impact.”

She also worries that the merger and subsequent selling of stores would most impact the areas off the main road system who are already at a disadvantage with the cost of goods being higher, supply chain issues, and now a possible loss of the only store available.

In February, the U.S. Federal Trade Commission sued to block the $24.6 billion merger between the grocery giants, saying the lack of competition would lead to higher grocery prices and lower wages for workers. It was a move met with support from Senators Lisa Murkowski and Dan Sullivan, who had said in February:

“The fact that this merger could result in grocery store closures and higher prices in Alaska—a state that already has some of the highest prices for food and basic goods in the country—had many Alaskans very concerned. We demanded that the FTC conduct a rigorous analysis to ensure that Alaskans would not be negatively impacted by this merger... I appreciate and support the FTC’s thorough analysis and decision to take action to block this merger for the benefit of Alaskans.”

Representative Peltola said that the feedback from communities has been so impactful that the FTC was inspired to do a new type of community involvement, saying that they will try to adopt some of the techniques that her office used to solicit feedback.

“I’m really proud of the work that my team and I have done on this, really taking the lead on this. Using teleconference and letters to help communicate their thoughts and feelings,” she says, citing recent telephone town halls that have been attended by citizens and various local politicians. “It really is the job of Congress and Senate to look at these trade issues in our state and advocate…I was very happy to insert myself in this way, in a way that state lawmakers can’t on this issue.”

Kroger first announced that it was buying Albertsons in October 2022. In February this year, the U.S. Federal Trade Commission (FTC), along with eight states, including Alaska, sued to block the deal, saying it would raise grocery prices for millions of Americans.

A district court in Oregon has set an August date for a hearing on the FTC's bid for a preliminary injunction to block the deal.