Kroger and Albertsons to sell stores in bid to alleviate concerns over merger
As reported by Reuters, Kroger, and Albertsons, two U.S. supermarket operators are looking to sell between 250 and 300 stores as divestitures.
This would be an attempt to ease U.S. lawmakers' and consumer advocacy groups’ concerns over their combination, who fear it could lead to increased grocery prices.
The Federal Trade Commission (FTC) is currently reviewing the proposed acquisition of Albertsons by Kroger for $24.6 billion.
Both companies operate 4,996 stores throughout the country and the ones they intend to sell have a cost of more than $1 billion.
Sources, which asked to remain anonymous, told Reuters, “The companies have started to sound out potential buyers for the stores and have been discussing their plans with the FTC to get its blessing.”
They added that potential buyers for the stores include rival grocery store operators that are looking to expand their U.S. footprint, like Netherlands- based Ahold Delhaize.
According to experts, it all goes down to how financially viable these stores are.
The reason that the FTC is skeptical about the decision is a previous acquisition from Albertsons who bought Safeway for $9 billion in 2014.
On that occasion, Albertsons was given clearance to sell 146 stores to Hagge, a West Coast regional grocer. However, months later, Haggen filed for bankruptcy, blaming its downfall on the deal with Albertsons. Albertsons then agreed to buy many of the stores back for $300 million.
A partner at law firm Clifford Chance told Reuters that the only chance that Albertsons and Kroger have is to “make sure they are shedding stores that can be formidable enough competitors in the eyes of the FTC.”
So far, Kroger, Alberton’s, and the FTC have declined to make any comments.