Kroger To Divest 400+ Stores in Merger

Kroger Supermarket
Kroger Supermarket | Image by Jonathan Weiss/Shutterstock

The grocery chain Kroger plans to sell more than 400 stores and other assets to C&S Wholesale Grocers as part of a comprehensive divestiture plan required under its proposed merger agreement with Albertsons.

Kroger and Albertsons recently announced a definitive agreement with C&S to sell 413 stores, eight distribution centers, two offices, and five private label brands if federal regulators approve the $24.6 billion merger, which has been pending since October 2022.

C&S is an industry leader in wholesale grocery supply and one of the largest privately held companies in the United States. The company operates 160 stores and supplies over 7,500 independent supermarkets, chain stores, military bases, and other institutions nationwide. Most of the company’s locations are Piggly Wiggly stores in Wisconsin.

By expanding a well-capitalized competitor like C&S into new geographies, Kroger is ensuring that none of its stores close as a result of the merger, all frontline associates remain employed, and all existing collective bargaining agreements and benefits continue, according to Rodney McMullen, chairman and CEO of Kroger.

After Kroger and Albertsons announced the proposed merger in October, Kroger quickly set out to identify a buyer who could run the business competitively while ensuring all existing stores and associates operate as normal. “C&S achieves all these objectives,” McMullen said in a news release.

The divestiture plan marks a key step forward in the merger process and fulfills Kroger and Albertsons’ commitments that were set out in the original agreement.

“I have long respected C&S and its leadership team,” said Vivek Sankaran, CEO of Albertsons. “I am thrilled that C&S’s outstanding capabilities and financial strength will ensure these divestiture stores can continue to grow and serve their communities as they do today.”

Besides buying more than 400 divested grocery stores, C&S will also pay Kroger $1.9 billion in cash once federal regulators approve the agreement. As of reporting, the merger remains on track to close in early 2024, pending regulatory clearance and other closing conditions.

The merger between Kroger and Albertsons presents a unique and exciting opportunity for C&S to further expand into the retail market, which is an important component of the company’s growth and future success, according to Eric Winn, COO and designated CEO of C&S.

“We look forward to welcoming thousands of new associates to the C&S family and providing them the opportunity to build long and successful careers,” Winn said in the news release. “We look forward to providing a superior shopping experience that delivers both quality and value to our customers.

In total, 26 Texas-based grocery stores will be sold to C&S if the merger goes through, according to Kroger spokesman John Votava, per NBC 5 DFW. Stores included in the sale include Albertsons, Tom Thumb, and Market Street locations around North Texas.

“Kroger is a customer-focused organization, and our ability to deliver value to customers is rooted in providing lower prices and more choices,” a spokesperson for Kroger told The Dallas Express. “As we have in past mergers, we will hold ourselves accountable to our customer commitments, including investing $500 million to lower prices, offering a broader selection of fresh products, and delivering value without compromise through an expanded Our Brands portfolio.”

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