Kroger and Albertsons Cos. on Monday, April 22 announced a revised plan to divest 579 stores, 63 of them in California, to C&S Wholesale Grocers as part of a proposed $26.4 billion merger.
New Hampshire-based C&S is paying $2.9 billion for the stores, according to a statement from Kroger and Albertsons.
Kroger and Albertsons added 166 stores to the divestiture list as they try to head off antitrust concerns by U.S. regulators. In February, the Federal Trade Commission and eight states sued to block the merger, saying it would eliminate competition and likely raise prices in the grocery industry.
On Monday, Rodney McMullen, Kroger’s chief executive officer, pushed back, saying the sale to C&S means no stores would close and employees would keep their jobs.
“Importantly …all existing collective bargaining agreements will continue, and associates will continue to receive industry-leading health care and pension benefits alongside bargained-for wages,” he said in a statement.
Union workers in California have protested the planned merger, saying their jobs could be in jeopardy in any divestiture.
“C&S has no track record of successfully running grocery stores,” John Marshall, a strategy director for the United Food and Commercial Workers International union, said in January. “If you look at their revenue over past six years, its been declining significantly — and they are clearly not a pro-union company.”
Kroger called union statements “false and misleading.”
“The facts are clear – this merger is inherently pro-union, and we have the track record to prove it,” the company said. “Kroger added more than 100,000 good-paying union jobs since 2012 and invested $1.9 billion to grow associate wages and industry-leading, comprehensive benefits since 2018.”
Kroger and Albertsons did not specify which stores in California would switch to the C&S banner.
The two grocery titans agreed to merge in late 2022, saying the blended business model would help them compete with retailers including Walmart, Costco and Amazon..
Kroger, based in Cincinnati, operates 2,750 stores in 35 states and the District of Columbia, including brands like Ralphs, Smith’s and Harris Teeter. Albertsons, based in Boise, Idaho, operates 2,273 stores in 34 states. Together they employ around 700,000 people.
Kroger has promised to invest $500 million to lower prices as soon as 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 store improvements at Albertsons as part of the deal.
The Associated Press contributed to this report.