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An article from


ONE YEAR LATER: THE HIGHS AND LOWS OF THE CONTROVERSIAL KROGER-ALBERTSONS MERGER

The grocery sector has been replete with M&A activity in recent years, but
nothing quite compares to the impact the pending mega-merger has had thus far.

Published Oct. 16, 2023
Peyton Bigora Associate Editor
 * 
 * 
 * 
 * 
 * 


Courtesy of Kroger

When Kroger and Albertsons announced their intention last October to combine
into a single grocery company, the retailers instantly set off a firestorm of
pushback from a wide range of critics worried the merger would squash
competition and disenfranchise shoppers. 

One year later, the complex deal remains as controversial as ever. As the two
grocery giants wait for the Federal Trade Commission to weigh in on their merger
plan, they continue to face heavy opposition from state officials, unions,
consumer groups and other critics determined to stop Kroger and Albertsons from
winning clearance for their proposed $24.6 billion transaction.




If allowed to proceed, the merger would meld two of the country’s largest
grocery chains into a company that, with more than 4,000 supermarkets across the
U.S., would rival Walmart and Amazon in scale. Kroger CEO Rodney McMullen and
Albertsons CEO Vivek Sankaran have spent the past year touting benefits they say
the merger would bring to consumers and workers, all the while expressing
confidence that the deal will ultimately go through even as analysts have said
winning FTC approval could be challenging for the retailers.

Here are highlights of how Kroger and Albertsons’ deal has progressed over the
past year and a look at the opposition the companies have encountered.

TIMELINE OF THE KROGER-ALBERTSONS MERGER

 * October 2022
   
   Kroger announced its agreement to purchase Albertsons and said it expected to
   close the deal in early 2024, subject to regulatory approval. Nearly two
   weeks later, Albertsons defended its upcoming $4 billion special
   dividend, which attorneys general for five states and Washington, D.C.,
   claimed could weaken the grocer’s financial health and ability to compete
   even as it rewarded investors.

 * November 2022
   
   Originally, Albertsons was slated to pay the dividend on Nov. 7, but legal
   battles and restraining orders postponed it. At the end of the month, Kroger
   and Albertsons’ chief executives testified during a U.S. Senate hearing that
   they did not intend to close any of the supermarkets they operate if the
   merger receives regulatory clearance.

 * December 2022
   
   Kroger announced that the Federal Trade Commission requested more details  —
   known as a “second request” — about the merger, indicating that the agency
   was taking a closer look at how the deal could impact competition.

 * January 2023
   
   Albertsons announced it would proceed with its $4 billion special dividend
   after a months-long court battle. The Washington Supreme Court declined to
   take up an appeal by the state’s attorney general after a lower court ruling
   sided with the dividend payout.

 * February 2023
   
   A Reuters report citing unnamed sources said Kroger and Albertsons were
   planning to divest between 250 and 300 stores in an effort to satisfy
   regulators.

 * May 2023
   
   Kroger reiterated its pledge to not close locations or lay off workers if the
   federal government allows the merger to proceed. 

 * September 2023
   
   Kroger and Albertsons unveiled a $1.9 billion divestiture plan with C&S
   Wholesale Grocers that includes offloading 413 stores, eight distribution
   centers and three store banners across 17 states and Washington, D.C., to the
   wholesaler.

Kroger and Albertsons’ CEOs have repeatedly stated this merger would lead to
reduced food prices and that employees’ jobs with the retailers would be secure
— but prominent industry players have remained unconvinced.

By comparison, other mergers and acquisitions in the grocery sector in recent
years, like Aldi’s plans to buy approximately 400 Winn-Dixie and Harveys
Supermarket from Southeastern Grocers, have received far less or no pushback.

OPPOSITION TO THE KROGER-ALBERTSONS MERGER 

Opposition to the pending Kroger-Albertsons mega-merger came almost immediately
after the grocer’s announcement last year and has not ceased. 

Primarily, opposition from organizations and state officials stems from concerns
that the deal could result in reduced competition, push prices up for consumers
and lead to job cuts due to store closures. 

The National Grocers Association (NGA) was one of the first organizations to
push back against the merger, with a statement from President and CEO Greg
Ferrara expressing concern that the combined grocery giant could have
“unprecedented dominance over the nation’s food supply chain,” negatively
impacting suppliers and independent grocers trying to compete. 

That same day, the United Food and Commercial Workers International Union (UFCW)
also voiced apprehension about the merger, noting it would oppose “any merger
that threatens the jobs of America’s essential workers, union and non-union, and
undermines our communities.” 

It didn’t take long before numerous state officials and state attorneys general
as well as the International Brotherhood of Teamsters aimed to show the FTC that
the pending Kroger-Albertsons merger would hurt the food retail industry. 

Last November, a month after the merger was announced, six local UFCW unions
representing over 100,000 Kroger and Albertsons workers around the country
called on regulators and members of Congres to oppose both the proposed merger
as well as Albertsons’ $4 billion dividend. 

These efforts gained significant momentum, and in April, local UFCW unions held
protests against the proposed merger under a coordinated effort led by Stop the
Merger, a group of over 100 organizations opposing the deal. 

While Kroger and Albertsons’ deal with C&S Wholesale was meant to appease
regulators, a coalition of seven local UFCW unions raised concerns about the
plan, pointing to Haggen’s ill-fated purchase of divested Safeway stores in 2015
as part of the Albertsons-Safeway merger. 

Similar to the UFCW, the Teamsters union, which represents over 22,000 members
who are Kroger and Albertsons employees,  in June released a statement after
months of discussion with both grocers over protecting the interest of Teamsters
employees, but ultimately voiced opposition to the merger.  

In an August letter to FTC Chair Lina Khan, the secretaries of state for
Colorado, Arizona, Vermont, Minnesota, Rhode Island, Maine and New Mexico said
the pending merger would deprive consumers of grocery shopping options, reduce
competition and hurt suppliers and workers.

Kroger and Albertsons have also faced pushback from consumers when, earlier this
year, a group of 25 grocery shoppers filed a federal lawsuit against the
grocers in the U.S. District Court for the Northern District of California in a
bid to prevent the planned merger. The lawsuit was dismissed nearly six months
later as the plaintiffs made “no effort to explain how the merger would affect
any one of them personally, in the area where they live and shop for groceries,”
the judge wrote in the ruling. 

Show more

Despite pushback, Kroger and Albertsons have held firm that their merger would
not negatively impact the industry.

Numerous times throughout the past year, Kroger executives have tried to sweeten
the deal in blog posts and interviews meant to ease public concerns. The grocer
pledged in August expanded employee resources if the merger gets approved. A
month later, Kroger made a local sourcing commitment tied to the Albertsons
merger. 

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EDITORS’ PICKS

 * Courtesy of Harris Teeter
   
   
   HARRIS TEETER REVAMPS ITS MARKETING APPROACH
   
   The Kroger-owned supermarket chain has rolled out a new logo and tagline as
   well as a modernized version of its familiar bread, fish and apple icon.
   
   By Sam Silverstein • March 21, 2023
 * Explore the Trendline➔
   Permission granted by Simbe Robotics
   Trendline
   
   
   IN-STORE TECHNOLOGY
   
   From smart carts to electronic shelf labels, grocers are adding new
   technology to their stores aimed at creating an engaging omnichannel
   experience.
   
   By Grocery Dive staff


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Summit
From TimeForge
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From Related Fund Management
October 20, 2023
Editors’ picks
 * Courtesy of Harris Teeter
   
   
   HARRIS TEETER REVAMPS ITS MARKETING APPROACH
   
   The Kroger-owned supermarket chain has rolled out a new logo and tagline as
   well as a modernized version of its familiar bread, fish and apple icon.
   
   By Sam Silverstein • March 21, 2023
 * Explore the Trendline➔
   Permission granted by Simbe Robotics
   Trendline
   
   
   IN-STORE TECHNOLOGY
   
   From smart carts to electronic shelf labels, grocers are adding new
   technology to their stores aimed at creating an engaging omnichannel
   experience.
   
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