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In a deal which could end up being the foundation for their $24.6 billion merger deal, Kroger and Albertsons Cos. have sold 413 stores to C&S Wholesale Grocers.
The sale also includes eight distribution centers and five private label brands.
The two grocers outlined exactly what the deal with C&S Wholesale Grocers accomplishes in regard to the potential merger deal, including:
- Extending a competitor to new geographies through the sale of stores to a well-capitalized buyer that is led by seasoned operators with a strong balance sheet and a sound business plan;
- Ensuring that no stores will close as a result of the merger;
- Maintaining all current collective bargaining agreements, which include healthcare and pension benefits, bargained-for wages, and ensuring frontline associates remain employed; and
- Committing to invest in associates and stores for the long term.
“Following the announcement of our proposed merger with Albertsons Cos., we embarked on a robust and thoughtful process to identify a well-capitalized buyer who will operate as a fierce competitor and ensure divested stores and their associates will continue serving their communities in the ways they do today,” said Kroger CEO and Chairman Rodney McMullen.
About a quarter of the stores sold are located in the state of Washington (104 locations). The rest are split between California (66), Colorado (52), Oregon (49), Texas and Louisiana (28), Arizona (24), Nevada (15), Illinois (14), Idaho (13), New Mexico (12), Montana, Utah, and Wyoming (12), and Washington, D.C., Maryland, and Virginia (10).
QFC, Mariano’s, and Carrs stores are also among those sold in the deal, and those banners that are retained by Kroger will be re-bannered into one of the retained Kroger or Albertsons banners following the close of the transaction. In the states where C&S will have the license to the Albertsons banner, Kroger will re-banner the retained stores following the close of the Kroger, Albertsons merger.
The private labels involved in the acquisition with C&S include Kroger’s Debi Lilly Design, Primo Taglio, Open Nature, ReadyMeals, and Waterfront Bistro.
“We look forward to welcoming thousands of new associates to the C&S family and providing them the opportunity to build long and successful careers,” said Eric Winn, chief operating officer and designated CEOr of C&S Wholesale Grocers. “Today’s announcement is another exciting opportunity for C&S to further expand into the retail market, which is an important component of our growth and future success.”
The C&S acquisition, however, is not appealing to everyone in the grocery marketplace. Local unions in 14 states representing more than 100,000 Kroger and Albertsons workers continue to express their concerns with the merger in general.
“We have raised alarms about the proposed Kroger,/Albertsons merger from the very beginning — from threats of store closures, higher prices and reduced competition, the harm to unionized workers’ ability to negotiate strong contracts, as well as the negative ripple effects lower union density would have on workers throughout the grocery industry” UFCW said in a statement. “News of a deal with C&S to buy hundreds of stores as part of the proposed merger in no way reduces those alarms.
“Indeed, in many respects this announcement raises the level of concern for our members.”
Kroger and Albertsons have stated they are still looking for the merger to be approved by the early part of 2024.
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