The potential divestiture list that Kroger and Albertsons would sell to third-party C&S Wholesale Grocers has finally been released. After reportedly many rounds of negotiations between the two big chains and the Keene, NH-based firm which operates primarily as a wholesaler, all 579 stores that will be part of potential $24.6 billion deal have been agreed to between the parties.
What’s missing, of course, is a court decision to approve or reject the deal. That court date is still scheduled for August 26 in Federal District Court in Portland, OR. Even when a decision is rendered, expect an appeal from the losing party.
Most of C&S’s potential store acquisitions would occur in the Western U.S. where Washington (124 stores), Arizona (101) Colorado (91), California (63) and Oregon (62) dominate the exchange list. All told, more than 470 of those stores are Albertsons controlled banners including Safeway, Albertsons, Jewel-Osco, Carr’s, Vons, Pavilion, Tom Thumb, Lucky, Market Street and Haggen.
The list also includes only nine units in the Mid-Atlantic – all non-union Harris Teeter stores – located in Selbyville, DE; Dunkirk, MD; Easton, MD; Germantown, MD; Olney, MD; Alexandria, VA (St. Asaph Street); Arlington, VA (N. Harrison Street); Purcellville, VA; and Washington DC (M Street SE). Based on potential overlapping stores between Safeway (Albertsons) and Harris Teeter (Kroger), that conflict list could easily have been doubled.
When Kroger and Albertsons increased the initial number of supermarkets that would be sold to C&S in April from 413 to 579 (and also changed many of the individual stores from the original list), the Federal Trade Commission (FTC) once again raised its concern as to whether C&S was qualified to operate retail stores in 18 states and Washington, DC. Currently C&S owns and operates 23 supermarkets.
Also included in the deal (if approved) are six distribution centers whose locations have now been revealed – two DCs in Denver; Phoenix; Tolleson, AZ; Salt Lake City; and Auburn, WA. Additionally, C&S would acquire a dairy plant in Denver.
If the deal is approved, current Albertsons COO and veteran executive Susan Morris would move to C&S and become president and chief executive of retail for C&S, and former Save A Lot CEO Leon Bergmann would return to C&S (where he began his food industry career) to supervise the company’s Western retail operations.
Shortly after the store list was released, Kroger announced that it is “Critical to bringing the meaningful and measurable benefits of our merger with Albertsons to associates, customers and communities across America. C&S is committed to ensuring zero stores will close as a result of the merger, all frontline associates will remain employed, all existing collective bargaining agreements will continue, and associates will continue to receive industry-leading benefits alongside bargained-for wages C&S’s strong operational focus coupled with its experienced management team and financial resources will position it to successfully operate divested stores for years to come. Importantly, we are committed to working closely with C&S to ensure a seamless transition of ownership for all divested stores and supporting operational infrastructure.”
Several local UFCW Locals (including Local 400 based in Landover, MD) quickly rebutted those remarks, noting in a statement: “Today’s announcement changes nothing. The merger is not a done deal, far from it. We remain focused on stopping the proposed mega-merger for the same reasons we have stated since it was first announced over 20 months ago – because we know it would harm workers, it would harm shoppers, it would harm suppliers and communities, and it is illegal. The merger proposal was rejected in January and February by the attorneys general from the states of Colorado and Washington and the Federal Trade Commission. We applaud their actions. They have been in possession of this proposed divestiture list, made public today by the companies, for months and that did not change their opposition to the proposed merger. These legal challenges to the proposed merger are moving forward with hearings beginning at the end of July and scheduled to go through September.”
