C&S to buy stores, other assets once merger is completed

CINCINNATI — The Kroger Co. and Albertsons Cos. today announced that they have entered a definitive agreement with C&S Wholesale Grocers LLC for the sale of 413 stores and other assets in connection with the supermarket retailers’ proposed merger.

The agreement also calls for Keene, N.H.-based C&S Wholesale to acquire three banners, eight distribution centers, two offices and five private label brands across 17 states and the District of Columbia.

The agreement includes sale of the QFC, Mariano’s and Carrs banners as well as exclusive licensing rights to the Albertsons name in Arizona, California, Colorado and Wyoming. In those four states Kroger will re-banner its retained stores upon completion of the merger. Kroger will maintain the Albertsons banner in other states where the chain operates.

In addition, Kroger will divest the Debi Lilly Design, Primo Taglio, Open Nature, ReadyMeals and Waterfront Bistro private label brands.

“Following the announcement of our proposed merger with Albertsons, 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, Kroger’s chairman and chief executive officer.

Kroger said the divestiture plan ensures no stores will close as a result of the merger and that all frontline associates will remain employed, all existing collective bargaining agreements will continue, and associates will continue to receive health care and pension benefits alongside bargained-for wages.

Kroger sees merger on track for closure in early 2024

Kroger and Albertsons announced their intention to merge on October 14. At that time, executives with the companies said they expected the deal to close in early 2024 if it passed muster with antitrust regulators at the Federal Trade Commission and the Department of Justice, and survives any court challenges. Kroger today said it still believes the deal remains on track for approval sometime early next year.

The grocery chains initially said they were willing to divest up to 650 stores if that’s what it would take to win regulatory approval.

In today’s announcement, Kroger said it will receive an all-cash consideration of approximately $1.9 billion upon fulfillment of customary closing conditions, including FTC and other governmental clearance of the merger.

Prior to closing, Kroger said, it may require C&S to purchase an additional 237 stores — taking the total to 650 — if regulators require more divestitures.

Kroger emphasized that the divestiture plan includes assurances C&S will be able to operate divested stores competitively and cohesively, with no disruption to the associate or customer experience.

“I have long respected C&S and its leadership team,” said Albertsons CEO Vivek Sankaran. “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.”

An industry leader in wholesale grocery supply

Today’s announcement noted that C&S is an industry leader in wholesale grocery supply and supply chain solutions, with a track record as a successful grocery retailer. Founded in 1918 as a supplier to independent grocery stores, C&S supplies more than 7,500 independent supermarkets, retail chain stores and military bases.

C&S also operates Grand Union grocery stores and Piggly Wiggly franchise and corporate-owned stores in the Midwest and Carolinas.

Through its operations, C&S purchases more than 100,000 products, giving it the ability to provide customers with the best product selection and pricing available. In addition to its franchise and corporate owned supermarkets, C&S provides end-to-end wholesale, supply and marketing services to its retailer customers.

C&S also brings experience with the merger process, having been an FTC-approved divestiture buyer in prior grocery transactions, with experience transitioning union employees and their associated collective bargaining agreements. In anticipation of the agreement, C&S’s 1918 Winter Street Partners retail holding company has been established to ensure a seamless closing process.

The number of stores contained in the divestiture plan by geography is as follows:

• Washington: 104 Albertsons and Kroger stores.
•  California: 66 Albertsons and Kroger stores.
•  Colorado: 52 Albertsons stores.
•  Oregon: 49 Albertsons and Kroger stores.
•  Texas and Louisiana: 28 Albertsons stores.
•  Arizona: 24 Albertsons stores.
•  Nevada: 15 Albertsons stores.
•  Illinois: 14 Kroger stores.
•  Alaska: 14 Albertsons stores.
•  Idaho: 13 Albertsons stores.
•  New Mexico: 12 Albertsons stores.
•  Montana, Utah and Wyoming: 12 Albertsons stores
•  Washington, D.C., Maryland and Virginia: 10 Harris Teeter stores.