Kroger announced the sale of 413 stores, including 26 in Texas and two in Louisiana, as part of its plan to purchase Albertsons Cos. for $24.6 billion.
Kroger said Friday the merger with Albertsons, which has been pending since October, is on track to be completed in early 2024. C&S will pay Kroger $1.9 billion in cash once the agreement is approved by federal regulators.
None of the stores sold in Texas include Kroger stores, said John Votava, a Kroger spokesman. The 26 locations are all from Albertsons which operates its namesake stores, Tom Thumb and Market Street locations in Dallas-Fort Worth.
A list of stores being sold is not yet available. It will be up to C&S how it brands the Texas stores it acquires. While C&S is a huge wholesale supplier, it only operates 160 stores and most are Piggly Wiggly stores in Wisconsin. It also operates Grand Union stores in New York and Vermont.
“Because we are still in the regulatory process, we are not able to share the specific locations included in the agreement,” Votava said.
As H-E-B started opening stores in Dallas-Fort Worth, both Kroger and Albertsons stepped up their new store development plans. Kroger is building two new stores in Melissa and Fort Worth and replacing a Plano store.
Tom Thumb is building stores in Forney and Waxahachie. As H-E-B builds its second store in Frisco, Tom Thumb responded with a third store under construction in the booming Collin County suburb. Tom Thumb also agreed to build in the RedBird redevelopment. Albertsons opened its first local store in years in south Irving.
Prior to the closing, Kroger may be required by the Federal Trade Commission to sell up to 237 more stores in some areas. If additional stores are added to the transaction, C&S has agreed to purchase the stores.
The sale to C&S Wholesale Grocers also includes eight distribution centers, two offices and five private label brands in 17 states and Washington, D.C.
Those additional assets and infrastructure are a recognition by Kroger that if it’s going to gain antitrust approvals, its divestiture had to address weaknesses of the 2015 Albertsons acquisition of Safeway which sold stores to weak operators and resulted in store closings.
C&S was founded in 1918 as a supplier to independent grocery stores and now supplies more than 7,500 independent supermarkets, chain stores, military bases and institutions with over 100,000 different products.
The private label brands in the sale to C&S are Debi Lilly Design, Open Nature, ReadyMeals, Waterfront Bistro and Primo Taglio. A switch of private label brands, which have become more popular with shoppers in recent years, can test customers’ loyalties. When Safeway purchased Tom Thumb it gave up the more popular Boar’s Head lunch meat brand and brought in its Primo Taglio and angered local customers. Kroger quickly snapped up Boar’s Head selling rights in D-FW.
C&S has agreed to honor all collective bargaining agreements, securing the union jobs and protecting employees’ health care and pension benefits as well as bargained-for wages.
“We are confident C&S’s experienced, purpose-driven leadership team and more than 100-year history of food industry experience will enhance the competitive marketplace,” Votava said.
Kroger CEO Rodney McMullen said during a conference call on Friday that the company reviewed dozens of potential buyers. The C&S sale ensures that no stores will close as a result of Kroger’s pending purchase of Albertsons, he said.
Along with the stores and distribution centers, the sale to C&S includes three banners — QFC in Washington and Oregon, Mariano’s in Illinois and Carrs in Alaska.
Also, C&S will be able to use the Albertsons banner in four states: Arizona, California, Colorado and Wyoming.
These stores won’t be sold until Kroger’s purchase of Albertsons is completed. Here’s the divestiture by state, number of stores and from which companies:
Texas 26 Albertsons Cos.
Louisiana 2 Albertsons Cos.
Washington 104 Albertsons Cos. and Kroger
California 66 Albertsons Cos. and Kroger
Colorado 52 Albertsons Cos.
Oregon 49 Albertsons Cos. and Kroger stores
Arizona 24 Albertsons Cos.
Nevada 15 Albertsons Cos.
Illinois 14 Kroger
Alaska 14 Albertsons Cos.
Idaho 13 Albertsons Cos.
New Mexico 12 Albertsons Cos.
Montana, Utah and Wyoming 12 Albertsons Cos.
Washington, D.C., Maryland and Virginia 10 Harris Teeter stores
