The grocery landscape could be changing with a mega-merger on the horizon, but it's hitting some snags along the way. Kroger Co., known for owning Fry's Food Stores, has pushed back the completion date of its $24.6 billion acquisition of Albertsons Cos. Inc., due to antitrust concerns thrown up by regulatory bodies.
Initially aiming to wrap things up by the end of their fiscal first quarter, the Cincinnati-headquartered Kroger, now expects to close the deal by Aug. 17, the company said in a statement, reported by American City Business Journals. This new target is notably the end of Kroger’s second fiscal quarter, highlighting the complexity and extent of the regulatory hurdles involved.
Kroger, which is the nation’s largest operator of traditional supermarkets, and Albertsons have been in the ring fighting antitrust concerns since announcing their plans in October 2022. "We remain in active and ongoing dialogue with the Federal Trade Commission and individual state attorneys general regarding our proposed merger and divestiture plan," Kroger stated in a news release, indicating continuous engagement with regulatory entities.
On the legal front, this past Monday, Washington state Attorney General Bob Ferguson filed a lawsuit aiming to stop the merger dead in its tracks, claiming it'll harm consumers by limiting options and hiking prices, ABC15 Arizona in Phoenix reported. "This merger is bad for Washington shoppers and workers,” Ferguson said, “Shoppers will have fewer choices and less competition, and, without a competitive marketplace, they will pay higher prices at the grocery store."
The proposed merger has significant implications, potentially bringing more than 4,000 stores under a single umbrella company. To alleviate regulatory concerns, Kroger and Albertsons have championed the proposed sale of up to 650 stores to C&S Wholesale Grocers. However, this divestiture plan has union leaders worried. "Kroger and Albertsons management has told everyone and anyone that no union members will lose their jobs, contracts or hours if this merger goes through," Teamsters General President Sean O’Brien said, "Those promises mean nothing if they sell parts of either company to C&S. We’re not going to let any company put Teamster jobs at risk," according to a business journal report.
Despite the controversies and legal battles, Kroger is optimistic about the merger's benefits, citing planned investments in price reductions, customer experience upgrades, wage increases, and community contributions. Rodney McMullen, Kroger’s CEO, remained confident, telling analysts on a recent call, “In terms of integration planning, we are progressing well.” Meanwhile, financial analysts, too, seem to buy Kroger's confidence in the deal's eventual completion, noting the company's strategic financial maneuvers in anticipation.
