Kroger and Albertsons Expand Store Divestiture Plan to 579 Stores Amid Antitrust Concerns

Kroger and Albertsons have increased their store divestiture plan to 579 stores, including Haggen, Fred Meyer, Safeway, and QFC stores, in response to federal regulators' antitrust concerns over their $24.6 billion acquisition deal. The updated plan includes 124 Albertsons and Kroger stores in Washington state that will be sold to C&S Wholesale Grocers.

The amended divestiture package, valued at $2.9 billion, represents an increase of 166 additional locations from the initial plan announced in September 2023. Kroger's CEO stated that the proposal ensures no store closures, all frontline associates will remain employed, and existing collective bargaining agreements will continue.

The companies claim the merger will bring lower prices and more choices to customers while securing the long-term future of unionized grocery jobs. Kroger has also committed to investing $500 million to lower prices and $1.3 billion to improve Albertsons stores post-merger.

Why this matters: The proposed merger between two of the largest grocery chains in the U.S. has significant implications for consumers, workers, and suppliers. The expanded store divestiture plan aims to address regulators' concerns about reduced competition and potential negative impacts.

However, the Federal Trade Commission (FTC) has sued to block the transaction due to antitrust concerns, arguing that the deal will hurt competition and negatively affect consumers, workers, and suppliers. Washington's Attorney General has also sued to block the merger, arguing it would harm consumers.

Some industry members and union leaders have voiced concerns over the increased store divestiture plan, arguing that it would be challenging for C&S to operate the stores effectively. The FTC's lawsuit aimed at blocking the merger is set for a hearing on August 26, 2024 in Oregon.

Kroger and Albertsons argue that the acquisition is necessary for them to remain competitive against expanding grocery market players like Walmart, Amazon, and Costco. They maintain that the merger will result in better prices, more product selection, and additional opportunities for workers.

Key Takeaways

• Kroger and Albertsons increase store divestiture plan to 579 stores to address antitrust concerns.
• The $2.9 billion divestiture package aims to address regulators' concerns over the $24.6 billion merger.
• FTC and Washington AG sued to block the merger, citing concerns over reduced competition and consumer harm.
• Kroger and Albertsons argue the merger will improve prices, selection, and opportunities for workers.
• FTC's lawsuit against the merger is set for a hearing on August 26, 2024 in Oregon.