Kroger, Albertsons Could Sell Over 400 Stores to C&S for $2 Billion: Report

Seeking to gain U.S. regulatory approval for their proposed $24.6 merger, grocery giants Kroger and Albertsons are in talks to offload 400 stores to C&S Wholesale Grocers for nearly $2 billion, as reported by Reuters. A deal may be reached as early as this week.

The grocery giants are primarily looking to sell stores in the Pacific Northwest and the Mountain states as well as some in California, Texas, Illinois and the East Coasts, Reuters reported, citing unnamed sources familiar with the matter.

Kroger and Albertsons currently operate a combined total of 4,996 stores nationwide.

If finalized, the deal would significantly expand C&S’s footprint beyond the 160 stores it owns and operates under the Grand Union and Piggly Wiggly banners. The company has been hoping to build up its store presence since losing major client Ahold Delhaize in 2019 when that chain transitioned to self-distribution.

In 2021 C&S, which is a wholesaler to over 7,000 grocery stores, purchased the majority of Wisconsin-based Piggly Wiggly Midwest 1 for an undisclosed sum, subsequently also picking up 12 Top Markets stores in November 2021. The latter sale was the result of a merger between Tops Markets and Price Chopper/Market 32. C&S converted the stores to Grand Union supermarkets.

Kroger and Albertsons have said they may divest between 100 and 375 stores by placing them in a new company that Albertsons shareholders would own. However, in a regulatory filing cited by the news outlet, Kroger said the upper limit for divestitures was 650 stores. Divestitures would take place to satisfy regulatory concerns about the monopolistic potential of the Kroger/Albertsons tie up.

The proposed merger between the grocery giants signals the biggest shift in the grocery landscape for emerging and entrepreneurial brands since Amazon purchased Whole Foods in 2017. It has received mounting scrutiny from consumers, union members, brands and federal organizations since it was announced last October.

Both grocery chains have previously argued that the merger, which is currently under regulatory review by the Federal Trade Commission (FTC), will increase competition by allowing the new mega-corporation to lower prices for shoppers and increase investments in its labor force.

Last month, Kroger promised to provide 700,000 part-time and full-time employees with more resources upon completion of the proposed merger. As part of its commitment, the retailer will provide its employees access to its education benefit, which offers up to $21,000 of reimbursement toward higher education or continued development.

The potential merger earlier this year faced opposition from the United Food and Commercial Workers International (UFCW), whose president Marc Perrone issued a statement in October expressing the union’s concern. UCFW local leader Andrea Zinder in a statement said, “The proposed merger of these two grocery giants is devastating for workers and customers alike and must be stopped.”

Reports of a deal between Kroger, Albertsons and C&S come after Aldi last month announced it will acquire Southeastern stores Winn-Dixie and Harvey from Southeastern Grocers (SEG).

ALDI, a German-owned private supermarket company that owns a variety of stores worldwide, will acquire all outstanding SEG stock in an all-cash investment that will include approximately 400 stores in Alabama, Georgia, Louisiana, Mississippi and Florida. The transaction is expected to close in the first half of 2024.

The proposed merger between Kroger and Albertsons is expected to close in 2024.