Kroger and Albertsons revealed Friday that they have entered into an agreement with C&S Wholesale Grocers to sell select stores, banners, distribution centers, offices, and private label brands in connection with their proposed merger for $1.9 billion.
Kroger said that this divestiture plan is a critical next step toward the completion of the merger by extending a well-capitalized competitor into new geographies. The plan ensures no stores will close because of the merger and that frontline employees will remain employed, according to the retailer.
The transaction includes 413 stores, along with QFC, Mariano's, and Carrs brand names. Stores currently under these banners that are retained by Kroger will be re-bannered into one of the retained Kroger or Albertsons Cos. banners following the close of the transaction.
Kroger will also divest the Debi Lilly Design, Primo Taglio, Open Nature, ReadyMeals, and Waterfront Bistro private label brands. The transaction also provides operational infrastructure including eight distribution centers, two offices, and functional employees.
"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, COO and CEO of C&S Wholesale Grocers, in a statement. "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."
The plan fulfills the divestiture commitments Kroger and Albertsons Cos. set out in their original merger agreement, according to the companies. It includes:
• Extending a competitor to new geographies through the sale of stores to a well-capitalized buyer
• Ensuring that no stores will close as a result of the merger
• Maintaining all current collective bargaining agreements, which include healthcare and pension benefits, bargained-for wages, and frontline employment
• Committing to invest in employees and stores for the long term.
"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, chairman and CEO of The Kroger Co., in a statement. "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."
The agreement is set to close in early 2024, subject to regulatory clearance and closing conditions. C&S stated they will continue to recognize the union workforce and maintain all collective bargaining agreements.
Related: Kroger, Albertsons May Sell Stores to C&S; H-E-B Opens Largest Fulfillment Center
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