The supermarket companies, which now expect to combine by mid-2024, are also facing an effort by Washington state’s attorney general to block the deal.
Dive Brief:
- Kroger and Albertsons have pushed back the timeline for their proposed merger and now expect the deal to close during the first half of Kroger’s next fiscal year, which begins Feb. 4.
- The supermarket chains are also facing a lawsuit filed Monday by Washington state Attorney General Bob Ferguson that seeks to prevent the grocers from combining.
- Kroger and Albertsons are pressing ahead with their controversial plan to combine amid unrelenting pressure from critics who claim their merger would sharply reduce competition in the grocery industry.
Dive Insight:
The announcement by Kroger and Albertsons that their merger will take longer to complete than they had originally expected comes as the companies continue to await word from federal regulators about whether they will allow the deal to go through.
In a Monday statement, the companies and C&S Wholesale Grocers, which agreed last year to buy more than 400 stores from Kroger and Albertsons in connection with the merger deal, said they delayed the anticipated closing date because they are in “continuing dialogue” with the Federal Trade Commission.
Even if the merger ultimately receives approval, under the companies’ revised timeline, it could take until August to close given the 12-month period Kroger’s fiscal 2024 covers.
“While this is longer than we originally thought, we knew it was a possibility and our merger agreement and divestiture plan accounted for such potential timing,” the companies said in a statement. “We remain committed to closing the transaction and providing the meaningful and measurable benefits that we promised when we originally announced the transaction.”
Kroger and Albertsons said when they announced their merger plan in October 2022 that the deal would close by early 2024 and stood by that expectation even as opposition to the deal continued throughout 2023. The FTC had been expected to issue a decision on the merger by Jan. 17, according to Bloomberg.
The Washington state lawsuit is another complication for Kroger, Albertsons and C&S as they try to overcome criticism that their deal would be harmful to consumers and the grocery sector.
In the suit, filed in King County Superior Court, Ferguson claims that the deal would squash competition in the supermarket industry and “likely result in store closures and worsening quality of store service.”
The suit also claims the combination would also hurt consumers in the state of Washington by depriving them of Albertsons’ presence in their communities and increasing the likelihood that other grocers “will coordinate to raise prices or reduce store or product quality.”
Kroger and Albertsons said they would not be deterred by the lawsuit.
“We are disappointed in Attorney General Ferguson’s premature decision to file a lawsuit while the merger is still under regulatory review. We remain in active and ongoing dialogue with the FTC and the other state Attorneys General,” the companies said in an emailed statement. “The merging parties will vigorously defend this in court because we care deeply about our customers and the communities we serve, and this merger will result in the best outcomes for Washington consumers.”
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