Note: The video in the player above is from a previous report.
In an effort to gain federal approval for a proposed merger, Kroger and Albertsons announced they would sell additional stores as part of a divestiture deal, including dozens in Illinois.
According to a press release, a total of 579 stores in the companies’ portfolio would be sold to C&S in a deal aimed at gaining federal approval for the merger, with regulators raising concerns about a lack of competition and other factors preventing a final decision. agreement.
Of those stores, 35 Kroger and Albertsons family stores in Illinois would be sold to C&S, according to a press release.
“We have reached an agreement with C&S for an updated divestiture program that maintains Kroger’s commitments to customers, associates and communities, addresses concerns raised by regulators and will further ensure that C&S can successfully operate the divested stores as they are operated today,” said Kroger Chairman and CEO Rodney McMullen.
Although the companies did not specify how many Illinois stores would be affected, a number of grocery chains operate the stores in the state. Albertsons currently operates 188 Jewel-Osco locations in Illinois, Indiana and Iowa, while Kroger operates locations in Illinois under its own banner.
As part of the deal, Mariano-branded sites could also be affected.
The companies have committed that no stores will be closed as a result of the merger and that all collective agreements will remain in effect.
According to the Chicago Tribune, that more than doubles the first 15 copies the company planned to sell in the state.
Even with the revised divestiture agreement, questions remain about whether the measures will be sufficient to gain federal approval for the merger. According to the Washington Post, critics have expressed concerns about C&S’s “lack of experience in managing a large fleet of stores.”
Kroger and Albertsons have agreed to provide the company with additional corporate and office infrastructure to address these concerns, according to the press release.
Illinois is one of eight states that have declared themselves party to a lawsuit filed by the Federal Trade Commission seeking to block the merger.
The FTC announced its action against the $24.6 billion deal, arguing it would eliminate competition and lead to higher prices for millions of Americans.
The matter must be reviewed by an administrative law judge at the agency. The FTC also filed a lawsuit in the U.S. District Court in Oregon, seeking a temporary injunction blocking the merger. This lawsuit was joined by attorneys general from eight states and the District of Columbia.
Kroger and Albertsons first agreed to merge in October 2022. The companies said a merger would help them better compete with Walmart, Amazon, Costco and other big rivals. Together, Kroger and Albertsons reportedly control about 13% of the U.S. grocery market; Walmart controls 22%, according to JP Morgan analyst Ken Goldman.
Both companies, immediately after the FTC’s announcement, said they would challenge the agency in court. Kroger and Albertsons said customers would likely experience higher food prices and store closings if the merger was not permitted.
“Albertson Cos. “The merger with Kroger will allow our neighborhood supermarkets to better compete with these mega-retailers, while benefiting our customers, associates and communities,” Albertsons said in a prepared statement. “We are disappointed that the FTC continues to use the same outdated view of the U.S. food industry that it used 20 years ago.”
“This move only strengthens large, non-union retailers like Walmart, Costco and Amazon by allowing them to further increase their overwhelming and growing dominance over the grocery industry,” Kroger said.
The FTC, which said the proposed deal would constitute the largest grocery merger in U.S. history, said it would also eliminate competition for workers, threatening their ability to get higher wages, better benefits and better working conditions.
Most Albertsons and Kroger employees are members of the United Food and Commercial Workers union, which represents 835,000 grocery workers in the United States and Canada. The union voted against the merger last year, saying the companies had not been transparent about its potential impact on workers.
“Whatever the next legal steps are, we must never forget that Kroger and Albertsons succeed because of these incredibly dedicated workers, and no merger proposal should be allowed to put their jobs or livelihoods at risk,” said Monday the union in a press release.
The union also criticized the $4 billion payout to Albertsons shareholders announced as part of the merger deal. Several states, including Washington and California, unsuccessfully tried to block the payment in court, saying it would weaken Albertsons financially.
Kroger has promised to invest $500 million to lower prices once the deal closes. It said it also invested in price reductions when it merged with Harris Teeter in 2014 and Roundy’s in 2016. Kroger also promised to invest $1.3 billion in Albertsons store improvements as part of the agreement.
NBC Chicago
