Kroger and Albertsons Companies resolved the biggest hurdle imposed by antitrust regulations to continue their integration process. The two grocery retail giants agreed to sell 413 supermarkets to C&S Wholesale Grocers for $1.9 billion.
In addition to the 413 supermarkets in 17 states and the District of Columbia, the sale agreement includes eight distribution centers, two regional headquarters, and five private labels. C&S will acquire the QFC, Mariano’s, and Carrs brands and exclusive licensing rights to the Albertsons brand in Arizona, California, Colorado, and Wyoming, according to the official announcement of the deal due to be completed in early 2024.
C&S is an industry leader in wholesale grocery supply and supply chain solutions, with a strong track record as a grocery retailer.
“With more than 104 years in the rapidly changing grocery industry, the foundation of C&S’s success has been our ability to innovate. Our fast-paced industry challenges us to continue to think differently about our business model and how we meet the needs of our consumers, employees, and communities, now and for generations to come,” said Rick Cohen, CEO of C&S Wholesale Grocers.
Founded in 1918 as a supplier of independent grocery stores, C&S serves customers of all sizes, supplying more than 7,500 independent supermarkets, retail chains, and military bases.
C&S currently manages Grand Union grocery stores, Piggly Wiggly franchises, and corporate-owned stores in the Midwest and Carolinas.
“Following the announcement of our proposed merger with Albertsons Cos., we embarked on a robust and thoughtful process to identify a well-capitalized buyer who will operate as a fierce competitor and ensure divested stores and their associates will continue serving their communities in the ways they do today. C&S achieves all these objectives,” said Rodney McMullen, president and CEO of Kroger.
McMullen added, “C&S is led by an experienced management team with an extensive background in food retail and distribution and has the financial strength to continue investing in associates and the business for the long run. Importantly, in our agreement, C&S commits to honoring all collective bargaining agreements, which include industry-leading benefits, retaining frontline associates, and further investing for growth.”
Kroger said the divestiture plan fulfills the commitments it made to Albertsons Cos. in its original merger agreement in October 2022 regarding store divestitures, including:
- Taking a competitor into new geographies through the sale of stores to a well-capitalized, experienced, operator-led buyer with a strong balance sheet and a reliable business plan.
- Ensure that no stores will be closed as a result of the merger.
- Maintain all collective bargaining agreements in place, including industry-leading health and pension benefits, negotiated wages, and assurance that frontline employees will remain employed.
- Commit to long-term investment in employees and stores.
“I have long respected C&S and its leadership team,” said Vivek Sankaran, CEO of Albertsons Companies. “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. Most importantly, they have made a clear commitment to continuing to invest in and care for associates, including by honoring all collective bargaining agreements currently in place. I echo Rodney’s confidence in the bright future ahead for the associates joining the C&S team.”
The number of stores to be sold to C&S by geographic area is as follows:
- Washington: 104 Albertsons Cos. and Kroger stores.
- California: 66 Albertsons Cos. and Kroger stores
- Colorado: 52 Albertsons Cos. stores
- Oregon: 49 Albertsons Cos. and Kroger stores
- Texas/Louisiana: 28 Albertsons Cos. stores
- Arizona: 24 Albertsons Cos. stores
- Nevada: 15 Albertsons Cos. stores
- Illinois: 14 Kroger stores
- Arkansas: 14 Albertsons Cos. stores
- Indiana: 13 Albertsons Cos. stores
- New Mexico: 12 stores Albertsons Cos.
- Montana/Utah/Wyoming: 12 stores Albertsons Cos.
- DC/Maryland/Virginia: 10 Harris Teeter stores
Should the FTC and other government agencies require Kroger and Albertsons Cos. to divest additional supermarkets to ensure compliance with antitrust regulations, the retail giant reported that it may require C&S to purchase an additional 237 supermarkets in some geographic regions. If more stores are added to the transaction, C&S will pay Kroger additional cash consideration based on an agreed-upon formula.
“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,” said Eric Winn, chief operating officer and CEO designate (as of Oct. 2) of C&S Wholesale Grocers.
“As a leader in the grocery industry, we have a strong heritage of value and customer service that is enabled by a deep commitment to our consumers, employees, and communities. Today’s announcement is another exciting opportunity for C&S to further expand into the retail market, which is an important component of our growth and future success. We look forward to providing a superior shopping experience that delivers both quality and value to our customers,” Winn concluded.