Initiator | Kroger |
---|---|
Target | Albertsons |
Type | Full acquisition |
Cost | $24.6 billion |
Initiated | October 14, 2022 |
Canceled | December 11, 2024 |
In October 2022, American grocery chain Kroger agreed to purchase rival Albertsons for $24.6 billion. Both companies, comprising two of the largest supermarket chains in the United States, [1] serve most of the country's mid-tier grocery market. Kroger planned to compete with non-union grocery chain Amazon Fresh, which includes Whole Foods Market, discount department store chains Target and Walmart, and the warehouse club retail chains Costco and Sam's Club. This merger would have created one of the largest grocery store chains in the United States, combining nearly 5,000 stores and employing approximately 700,000 people. [2]
In February 2024, the Federal Trade Commission (FTC) filed a lawsuit to block the merger stating the deal would raise prices, lower quality, limit choices for consumers, and harm workers. [3] In December 2024, a U.S. District Judge agreed with the FTC, that the merger would risk reducing competition at the expense of both consumers and workers. The federal judge halted Kroger's acquisition of Albertsons. [4] The merger was also simultaneously halted by a Washington state judge that ruled the merger violated consumer-protection laws within the state. [5] Both companies terminated the deal following the rulings. [6]
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Albertsons merged with Safeway in 2015 in a $9.2 billion deal which included an FTC requirement to spin off 168 stores to stop the new company having a monopoly in certain markets. [7] The commitment was the largest ever divestiture of supermarkets at the time. [8] 146 stores were sold to Haggen, a Washington supermarket chain, for around $300 milion. [7] The deal was closed in January 2015; [9] Haggen ended up announcing in August that it would close or sell around a fifth of its stores, [10] and in September sued Albertsons for allegedly sabotaging its expansion, before filing for bankruptcy. [9] Albertsons bought 33 former Haggen stores for $14.3 million at a bankruptcy auction in November, many for the nominal price of $1 since they came with liabilities as part of their sale. [7] The failure of the spin-off of stores to Haggen has been seen as a particular concern for the proposed Albertsons–Kroger merger. [8]
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In October 2022, Kroger agreed to buy Albertsons for $34.10 per share, valuing the deal at $24.6 billion. [1] The acquisition aims to enhance Kroger's competitive edge by expanding its market presence and leveraging economies of scale to offer better prices and services to customers. However, the merger has faced significant scrutiny from regulators and opposition from various stakeholders. [11]
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In May 2023, the United Food and Commercial Workers International Union (UFCW) announced their opposition to the deal. [12] The International Brotherhood of Teamsters also oppose the deal, [13] saying it "threatens jobs, wages, and benefits for thousands of workers". [14]
Several UFCW local determined in July 2024, that Kroger's and Albertson's proposed divestiture of hundreds of stores to C&S Wholesale Grocers would reduce consumer access to medications and harm pharmacy competition nationwide. A majority of the 579 stores slated to be acquired by C&S Wholesale Grocers would include pharmacies according to John Marshall, a financial analyst with UFCW Local 3000 and UFCW Local 3245. [15]
On November 29, 2022, the chief executives of the two companies went before the antitrust panel of the Senate Judiciary Committee to defend the merger. [16]
The Federal Trade Commission (FTC) raised concerns about the potential anticompetitive effects of the merger. The FTC filed a lawsuit in February 2024 to block the acquisition, arguing that it would reduce competition, lead to higher grocery prices, and negatively impact workers’ wages and benefits. [17]
On December 10, 2024, U.S. District Judge Adrienne Nelson agreed with the FTC, that the merger would risk reducing competition at the expense of both consumers and workers. Judge Nelson halted Kroger's $24.6 billion acquisition of Albertsons with a preliminary injunction. Lawyers for the companies previously have said that if the judge were to rule against the deal, the acquisition would likely be called off. [18]
Attorneys general from Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming joined the FTC's lawsuit to block the merger. [19]
In January 2024, Bob Ferguson, the Washington Attorney General filed a lawsuit to stop the merger. [20] In February 2024, Colorado Attorney General Phil Weiser filed a lawsuit in an attempt to stop the merger due to his belief that it would greatly reduce competition and harm Coloradans. [21]
On December 10, 2024, King County Superior Court Judge Marshall Ferguson ruled in favor of blocking the deal for the merger. Throughout the three week trial, the state argued that C&S Wholesale did not have sufficient retail experience to effectively operate the stores it would be acquiring and that it would end up selling or simply closing the locations. State regulators also warned that the plan to preserve competition through the divestiture of hundreds of Kroger and Albertsons stores would be fatally flawed. The Superior Court judge said, "The effect of this merger may be to substantially lessen competition in Washington." Kroger and Albertsons committed to make $1 billion in investments to keep prices lower. However, attorneys for the state called the investment promises "unenforceable, impossible to verify, and temporary." [22]
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To address regulatory concerns, Kroger and Albertsons proposed divesting 579 stores across various locations to C&S Wholesale Grocers. This divestiture was intended to maintain competitive balance in the grocery market and alleviate fears of a monopoly. [23]
Kroger and Albertsons terminated their merger attempt on December 11, 2024, following its block by the two judges; both companies accused each other of not doing enough to alleviate regulatory concerns. [6] The latter also filed a breach of contract lawsuit against the former, seeking at least $6 billion in damages, which includes a $600 million termination fee. [6] [24]
Albertsons Companies, Inc. is an American grocery company founded and headquartered in Boise, Idaho.
The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction over federal civil antitrust law enforcement with the Department of Justice Antitrust Division. The agency is headquartered in the Federal Trade Commission Building in Washington, DC.
The Kroger Company, or simply Kroger, is an American retail company that operates supermarkets and multi-department stores throughout the United States.
Ralphs is an American supermarket chain in Southern California. The largest subsidiary of Cincinnati-based Kroger, it is the oldest such chain west of the Mississippi River. Kroger also operates stores under the Food 4 Less and Foods Co. names in California.
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United Supermarkets, LLC, d.b.a. The United Family is an American supermarket chain. With headquarters in Lubbock, Texas, its roots go back to 1916, when H.D. Snell opened his first United Cash Store in Sayre, Oklahoma. The chain has grown to include 95 stores in 30 Texas cities and over 10,000 workers. In 2014 it became a wholly-owned subsidiary of Albertsons.
Safeway, Inc. is an American supermarket chain. The chain provides grocery items, food and general merchandise and a variety of specialty departments, such as bakery, delicatessen, floral and pharmacy, as well as Starbucks coffee shops and fuel centers. It is a subsidiary of Albertsons after being acquired by private equity investors led by Cerberus Capital Management in January 2015. Safeway's primary base of operations is in the Western United States, with some stores located in the Mid-Atlantic region of the Eastern Seaboard. The subsidiary is headquartered in Pleasanton, California.
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The Vons Companies, Inc. is a supermarket chain owned by Albertsons, with most of its locations in Southern California and the Las Vegas Valley. It is headquartered in Fullerton, California, and operates stores under the Vons and Pavilions banners. It was owned by Safeway Inc. and headquartered in Arcadia, California, before that company was acquired by and folded into Albertsons along with all of their subsidiaries, including Vons.
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Food 4 Less is the name of several grocery store chains, the largest of which is currently owned by Kroger. It is a no-frills grocery store where the customers bag their own groceries at the checkout. Kroger operates Food 4 Less stores in the Chicago metropolitan area and in Southern California. Kroger operates their stores as Foods Co. in northern and central California, including Bakersfield and the Central Coast, because they do not have the rights to the Food 4 Less name in those areas. Other states, such as Nevada, formerly contained Kroger-owned Food 4 Less stores.
C&S Wholesale Grocers, LLC is a national wholesale grocery supply company in the United States, based in Keene, New Hampshire. In 2021 it was the eighth-largest privately held company in the United States, as listed by Forbes. C&S operates and supports corporate grocery stores and serves independent franchisees under a chain-style model throughout the Midwest, South and Northeast. C&S owns the Piggly Wiggly grocery brand, which is independently franchised to store operators, the Grand Union supermarkets brand, as well as several private label brands, including Best Yet.
Haggen Food & Pharmacy is an American regional chain of grocery stores located in the state of Washington. It was founded in 1933 by Ben Haggen, Dorothy Haggen, and Doug Clark in Bellingham, Washington, where they opened first store on Bay Street. For the majority of its history under the ownership of Haggen, Inc., Haggen was the largest independent grocery retailer in the Pacific Northwest, with locations in Washington and Oregon. From 1982 through 2014, the company also operated the Top Food & Drug chain.
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