Kroger and Albertsons, two major supermarket chains in the United States, announced on Monday that they will sell more of their stores to address the federal government’s concerns about their proposed merger.
The companies now plan to sell 579 Kroger and Albertsons stores in markets where they overlap to C&S Wholesale Grocers, a grocery supplier and operator based in New Hampshire, for $2.9 billion. This is an increase from the initial divestiture plan announced in September, which involved selling 413 stores to C&S for $1.9 billion.
The decision to sell more stores comes after the U.S. Federal Trade Commission (FTC) sued to block the $24.6 billion merger between Kroger and Albertsons in February. The FTC argued that the lack of competition resulting from the merger would lead to higher grocery prices and lower wages for workers. The agency also criticized the initial plan to divest 413 stores to C&S, stating that it was “inadequate” and would not provide C&S with the necessary resources to effectively compete with the combined Kroger and Albertsons.
Under the updated plan, Kroger would sell its Haggen banner to C&S, and C&S would license the Albertsons banner in California and Wyoming and the Safeway banner in Arizona and Colorado. Additionally, C&S would gain access to some private-label brands in the stores. The proposal also includes a commitment from C&S to keep all of the stores open and honor any existing labor agreements.
C&S CEO Eric Winn expressed confidence in the expanded divestiture package, stating that it will provide the stores, assets, and expert operators needed to ensure the stores continue to serve their communities successfully for many years to come.
Kroger and Albertsons initially announced their planned merger in October 2022, arguing that it is necessary for them to better compete with large rivals such as Walmart and Amazon. However, it remains unclear whether the updated plan will satisfy regulators and alleviate the concerns raised by the FTC regarding the potential impact on competition, prices, and wages in the grocery industry.
The Associated Press contributed to this article.