CORRECTIONAn earlier version of this story said the stores would be closed. Instead, they will be divested, meaning they will be sold to another company. The corrected story is below, along with a statement from Kroger.


 

The grocery store landscape in Louisiana and Texas may undergo significant changes if the proposed merger between retail giants Kroger and Albertsons is approved. This potential consolidation has raised concerns about its impact on local jobs and food options.

The Kroger Co. aims to acquire the Albertsons name, with plans to shed over 400 stores, predominantly in the western part of the United States, as part of the merger. To address regulatory concerns, a large divestiture of 413 stores to C&S Wholesale Grocers was announced by Kroger and Albertsons in September 2023.


READ MORE: Two Big Louisiana Grocery Stores Could Become One Very Soon


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What's Happening?

The majority of these divested stores are situated on the West Coast, with limited overlap in other regions. The divestiture agreement includes an option for the buyer to acquire additional stores, if mandated by regulators.

To address the regulatory concerns, in September ’23, Kroger and Albertsons announced a large divestiture of 413 stores to C&S Wholesale Grocers. Most of the divested stores are located on the West Coast, while the companies have limited overlap in other areas (see below). As part of the divestiture agreement, the buyer has agreed to purchase an additional 237 stores if such sales are required by regulators.

 

(Photo by Scott Olson/Getty Images)
(Photo by Scott Olson/Getty Images)
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However, government agencies overseeing such large-scale transactions, such as the Federal Trade Commission (FTC) and several lawmakers, have expressed concerns about previous divestitures. They argue that divested stores in past instances were unable to compete and eventually faced bankruptcy. Despite these concerns, the merger may still proceed.

But the deal could still go through.

Will Louisiana and Texas Be Affected?

Several stores across both states are going to be impacted in the divestiture plan put forward by Kroger. Publicly available information indicates that 28 stores in Texas and two in Louisiana will be impacted. Texas, being Albertsons' second-largest state in terms of store count, with 44 locations, is set to close 26 stores. Louisiana will witness the closure of two Albertsons stores.

The full map of the two companies' stores across the country can be seen below.

Credit: The Kroger Co.
Credit: The Kroger Co.
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Texas is Albertsons’ second-biggest state in terms of number of stores: it clocks in with 44 Albertsons locations, and 26 are slated to be divested.

Louisiana, meanwhile, will see two of its Albertsons stores divested.

Both Kroger and Albertsons currently operate over 2,000 stores nationwide, and the merger is scheduled to conclude after January 17, 2024. However, the merger is not a finalized deal. Government regulators, including the FTC, which has taken an increasingly aggressive stance against mergers and acquisitions, could potentially block the transaction.

Further complicating matters, while the two chains have agreed on a merger, it's not a done deal. Those same government regulators who were questioning the deal could try to block it, resulting in legal action that might delay the deal.

In its report on the deal, the International Center for Law & Economics wrote that "Given the Federal Trade Commission’s (FTC) increasingly aggressive enforcement stance against mergers and acquisitions, as well as Chair Lina Khan’s previous writings on food retail specifically, the agency appears poised to try to block the transaction—even with divestitures."

Shopping Cart (wikimedia commons)
Shopping Cart (wikimedia commons)
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"The FTC and U.S. Justice Department’s (DOJ) recently unveiled draft revisions to the agencies’ merger guidelines further suggest that they plan to challenge more mergers—and to do so more aggressively than under past administrations," it added.

The full report can be found here.

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Sold, Not Closed

Kroger and Albertsons have both reached out to KPEL News to confirm the 28 total stores will be divested, rather than closed.

“Kroger joining with Albertsons will mean lower prices and more choices for more customers in more communities, higher wages and more industry-leading benefits for associates, securing union jobs and expanded opportunities for farmers and suppliers," a Kroger spokesperson said in a statement. "The divestiture plan with C&S builds on these commitments by ensuring zero stores will close as a result of the merger, all frontline associates will remain employed, all existing collective bargaining agreements will continue, and associates will continue to receive industry-leading benefits alongside bargained-for wages.”

A representative of Albertson's also reached out to confirm that none of the stores will close as a result of the merger and divestiture.

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