Proposed Kroger, Albertsons merger will take more time to close as scrutiny continues
- The proposed merger was previously set to be completed by early 2024.
- The deal has faced intense opposition from U.S. lawmakers and political leaders.
- Those who oppose the merger worry that consolidation will lead to higher prices and fewer shopping options for consumers.
Supermarket chain Kroger's proposed acquisition of rival Albertsons is now expected to close in the first half of Kroger's fiscal year 2024 instead of early this year. Ongoing discussions with federal regulators delayed the deal's close, the companies said in a Monday statement.
Kroger, Albertsons and C&S Wholesale Grocers said they are in "active and ongoing dialogue" with the Federal Trade Commission and individual state attorneys general, according to the joint statement. "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."
In a bid to close the proposed $24.6 billion deal, Kroger agreed in September to divest 413 stores and eight distribution centers to C&S for $1.9 billion. With regulatory approval, the merger may require C&S to purchase an additional 237 stores from Kroger and Albertsons, Kroger said last year.
Kroger noted that it plans to invest $500 million to reduce prices and $1.3 billion to enhance customer experience. The grocery chain also said it will invest an incremental $1 billion to raise wages and benefits for all associates after the deal is done.
Kroger is the nation's largest grocer with nearly 2,800 stores, while Albertsons is the second-biggest and owns brands such as Safeway and Acme.
The proposed merger — which was previously set to be completed by early 2024 once the Federal Trade Commission completes its antitrust review — has faced intense opposition from U.S. lawmakers and political leaders due to antitrust concerns.
Those who oppose the merger worry that consolidation leads to higher prices and fewer shopping options for consumers, as well as job losses from a lack of marketplace competition.
Washington state's attorney general filed a lawsuit Monday seeking to block the proposed merger, calling it "harmful" for shoppers and workers. In response to the lawsuit, Kroger and Albertsons said in a Monday statement that the companies are "disappointed" in the attorney general's "premature decision" to file a suit while the merger remains under regulatory review.
"Blocking this merger would only serve to strengthen larger, non-unionized retailers like Walmart, Costco and Amazon, by allowing them to maintain and increase their overwhelming and growing dominance of the grocery industry," Kroger and Albertsons said in the statement.
Six lawmakers, including Sens. Elizabeth Warren and Bernie Sanders and Rep. Alexandria Ocasio-Cortez, had also written a letter to the FTC in December arguing that Kroger's proposal to divest hundreds of stores to C&S fails to address potential harms to consumers, workers and the grocery industry.