Kroger and Albertsons have agreed on a deal to sell more than 400 stores and other assets to C&S Wholesale Grocers for around $1.9bn as part of moves to convince competition regulators to allow the merger of two of the largest supermarket chains in the US.
The transaction includes the sale of 413 stores, eight distribution centers, two offices and five private-label brands. All fuel sites and pharmacies associated with the divested stores will also remain with the stores and continue to operate.
Kroger agreed to acquire rival Albertsons last October in a deal worth $24.6bn. It will create a grocery behemoth with increased buying power to challenge Walmart and online rivals such as Amazon at a time of surging food inflation.
The deal is targeted to close early next year but has faced tough scrutiny from consumer groups and US lawmakers over concerns it would reduce competition and drive up grocery prices.
In their original merger agreement, Kroger and Albertsons set out plans to divest stores to ease competition concerns.
In a statement on Friday, Kroger said it may need C&S to purchase up to an additional 237 stores in certain geographies to get the regulatory nod for the deal.
C&S is a supplier to more than 7,500 independent supermarkets, retail chains and military bases. It currently runs Grand Union grocery stores and Piggly Wiggly franchise and corporate-owned stores in the Midwest and Carolinas.
Rodney McMullen, Chairman and CEO of The Kroger Co, commented: “Following the announcement of our proposed merger with Albertsons, we embarked on a robust and thoughtful process to identify a well-capitalised 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. C&S achieves all these objectives…Importantly, in our agreement, C&S commits to honouring all collective bargaining agreements, which include industry-leading benefits, retaining frontline associates, and further investing for growth.”
Eric Winn, COO and designated CEO of C&S Wholesale Grocers, added: “As a leader in the grocery industry, we have a strong heritage of value and customer service that is enabled by a deep commitment to our consumers, employees and communities. 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. We look forward to providing a superior shopping experience that delivers both quality and value to our customers.”
