Under federal scrutiny over their plans to merge, supermarket chains Kroger and Albertsons said they will sell off about 20 more Illinois grocery stores than originally planned in an updated divestiture planned announced Monday.
In September, the grocery companies said they planned to sell off the Mariano’s brand name and 14 Kroger-owned grocery stores in Illinois. At the time, a spokesperson for Kroger-owned Mariano’s confirmed that at least some Mariano’s stores would be sold. On Monday, the company said its Illinois divestitures would include a total of 35 Kroger and Albertsons-owned stores.
Lavance Fulton restocks shelves at Mariano’s in Chicago’s Bucktown neighborhood on March 19, 2020. (Chris Sweda/Chicago Tribune)
Kroger owns about 44 Mariano’s grocery stores in Illinois in addition to some Food 4 Less stores; Albertsons owns 183 Jewel-Osco grocery stores in Illinois. A spokesperson for Kroger declined to specify how many stores under which banners would be sold in Illinois.
The companies now plan to sell a total of 579 Kroger and Albertsons stores in markets where they overlap to C&S Wholesale Grocers, a New Hampshire grocery supplier and operator, for $2.9 billion. Under the initial divestiture plan, announced in September, C&S had planned to purchase 413 stores for $1.9 billion.
It’s unclear if the new plan will satisfy regulators. In February, the U.S. Federal Trade Commission sued to block the $24.6 billion merger between the grocery giants, saying the lack of competition would lead to higher grocery prices and lower wages for workers.
The FTC also said the initial plan to divest 413 stores to C&S was “inadequate” and would give C&S a hodgepodge of unconnected stores and brands, leaving it ill-equipped to compete with a combined Kroger and Albertsons.
Labor unions and various elected officials have also raised concerns about the impact the merger could have on consumers and grocery workers. In February, Illinois Attorney General Kwame Raoul was one of nine attorneys general who filed a lawsuit challenging the merger in federal court. In a statement at the time, Raoul expressed concern the merger would lead to increased grocery prices and decreased consumer choice “at a time many families are struggling to keep up.”
Under the updated plan, Kroger would sell its Haggen banner to C&S. C&S would also license the Albertsons banner in California and Wyoming and the Safeway banner in Arizona and Colorado. C&S would also get access to some private-label brands in the stores. Under the proposal, C&S would keep all of the stores open and honor any labor agreements.
“We are confident this expanded divestiture package will provide the stores, supporting assets and expert operators needed to ensure these stores continue to successfully serve their communities for many generations to come,” C&S CEO Eric Winn said in a statement.
The companies first announced their planned merger in October 2022.
AP contributed.
