Kroger Reveals Divestiture Plan For Albertsons Merger Approval: Report

Kroger Co. KR has reportedly revealed the comprehensive list of stores, distribution centers, and plants it plans to divest to gain regulatory approval for its proposed merger with Albertsons Companies Inc ACI.

The announcement comes as the companies prepare for a trial in August that will determine the fate of their $24.6 billion merger.

Employees at the affected locations have been notified, according to a memo from Chief Executive Officer Rodney McMullen, reported Bloomberg.

Impacted workers will transition to becoming employees of C&S Wholesale Grocers after the deal closes but will remain under Kroger and Albertsons until then, the report added.

C&S has pledged to transfer existing pay and health plans and to honor all collective bargaining agreements.

The divestiture package, initially consisting of 413 stores, has been increased to 579 following the Federal Trade Commission’s (FTC) intervention.

The list includes 124 stores in Washington state, 101 in Arizona, 91 in Colorado, and 63 in California, among others. Additionally, the package includes a dairy plant in Colorado and six distribution centers across four states.

Also Read: Kroger To Gain From Long-Term Margin Support, Higher Customer Visits – Analyst Sees ‘Attractive Entry Point’

Kroger and Albertsons aim to merge to better compete with larger, non-unionized rivals such as Amazon.com Inc. AMZN, Walmart Inc. WMT, and Costco Wholesale Corp. COST.

They have committed to investing $500 million to reduce prices, $1 billion to enhance worker wages and benefits, and $1.3 billion to upgrade Albertsons stores.

The FTC has raised concerns that the merger could harm consumers by reducing competition, potentially leading to higher prices and diminished service quality.

The complaint also highlights the possibility of the merged entity gaining undue leverage over workers, potentially impacting wage growth and benefits.

The FTC has also questioned the adequacy of the proposed divestiture package, citing challenges faced by Haggen Holdings LLC in a similar situation in 2015.

Price Action: KR shares are trading lower by 0.44% at $51.63 at last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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