The Kroger Co., Albertsons Cos. and C&S Wholesale Grocers issued a statement updating status of the proposed Kroger/Alberstons merger and related agreements, with a United States Federal Trade Commission ruling on the transaction soon.
According to the statement, the parties remain in active and ongoing dialogue with the FTC and individual state attorneys general who have weighed in on the transaction including the proposed merger of Kroger and Albertsons and related divestiture plan involving C&S. The parties insisted the merger would result in the best outcomes for customers, associates and communities served by the companies.
The statement went on to say:
In light of our continuing dialogue with the regulators, we are updating our anticipated closure timeline. We currently anticipate that the closing will occur in the first half of Kroger’s fiscal 2024. While this is longer than we originally thought, we knew it was a possibility and our merger agreement and divestiture plan accounted for such potential timing. We remain committed to closing the transaction and providing the meaningful and measurable benefits that we promised when we originally announced the transaction.
The companies went on to assert Kroger would invest $500 million to reduce prices beginning as soon as the merger with Albertsons is complete, as well as invest an incremental $1.3 billion to enhance the customer experience. They stated Kroger is committed to protecting union jobs, with no store closures or frontline associate layoffs anticipated as a result of the merger. In addition, plans call for Kroger to invest an incremental $1 billion to raise wages and comprehensive benefits for all associates post-close. That would build on the $1.9 billion in incremental investments the company has made in wages and comprehensive benefits since 2018. Additionally, post-close, Kroger said it intends to provide more than 700,000 part-time and full-time associates access to its continuing education benefit, which offers up to $21,000 of reimbursement toward higher learning or continued development as well as other benefits.
According to the parties, as the identified divestiture buyer, C&S Wholesale Grocers has committed to recognize the union workforce, maintain all collective bargaining agreements, retain frontline employees and further invest for growth.
In assessing the statement, Pulse Ratings noted the statement suggested concern among the parties about an FTC rejection of the merger and related actions as currently proposed. Yet, that wouldn’t necessarily kill the deal. Litigation by the supermarket chains could be a next step if the FTC does move to quash the deal, however the commission could extend its deadline and allow for further negotiation with the parties.
As such, the FTC might be less inclined to kill the deal than to insist on specific modifications.
Scott Friedman, Pulse Ratings chief credit officer, told HomePage News, “I don’t believe it would go directly to a complete derailment. I believe the FTC might reject the deal as it is currently constructed and look for additional store divestitures beyond what Kroger and Albertsons have already announced in their transaction with C&S.”