In line with food and beverage industry trends, Kroger and Albertsons have announced plans to sell over 400 stores in order to secure regulatory approval for their mega-merger. The two major US grocery retailers joined forces with the aim of strengthening their position in the food and drink business.
However, the merger has faced opposition from regulators and politicians, causing Kroger and Albertsons to seek alternative solutions. As a result, a deal has been struck with C&S Wholesale Grocers for the sale of various assets.
The agreement involves the sale of 413 stores, eight distribution centres, two office sites, and five private-label brands across 17 US states and the District of Columbia. The deal also includes the acquisition of the QFC, Mariano’s, and Carrs retail banners.
These assets, including the stores provisionally named SpinCo, will be sold to C&S Wholesale Grocers, ensuring a well-capitalized buyer who will maintain competition in the market and continue serving communities.
Kroger chairman and CEO Rodney McMullen expressed confidence in C&S Wholesale Grocers, highlighting their experience and financial strength in food retail and distribution. The deal, if approved, will see Kroger receive approximately $1.9bn from C&S Wholesale Grocers.
However, additional store purchases may be required to secure regulatory clearance, leading to further financial investment by C&S Wholesale Grocers.
Albertsons CEO Vivek Sankaran expressed his belief that C&S Wholesale Grocers’ capabilities and financial strength will enable the divestiture stores to continue growing and serving their communities as they do currently. He also emphasized C&S Wholesale Grocers’ commitment to honoring collective bargaining agreements.
Despite some opposition from state officials, Kroger maintains that the merger is on track and expects it to be finalized in early 2024.
As the food and drink industry evolves, it is crucial for businesses to adapt and find innovative solutions to regulatory challenges. Kroger and Albertsons’ decision to sell assets and collaborate with C&S Wholesale Grocers demonstrates their commitment to remaining competitive in this dynamic market.
