Kroger, Albertsons have buyer for 49-plus Oregon stores if merger approved

Published 11:00 am Friday, September 8, 2023

Fred Meyer is a chain of stores owned by Kroger Co. A proposed merger between Kroger, owner of Fred Meyer and Albertsons, which owns Safeway, could dramatically shake up the supermarket landscape in the Pacific Northwest.

Supermarket giants Kroger and Albertsons announced Friday they will sell off more than 400 stores, including at least 49 in Oregon, and other assets for $1.9 billion as part of their efforts to complete their proposed $24.6 billion merger, The Oregonian reports.

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The plan is to sell 413 stores — including some from Kroger’s Fred Meyer and QFC chains and Albertsons’ Safeway — in 17 states and the District of Columbia to New Hampshire-based C&S Wholesale Grocers, the companies said in a news release. All fuel centers and pharmacies associated with the divested stores will remain with the stores and continue to operate.

The agreement also includes selling eight distribution centers and two corporate offices to C&S Wholesale Grocers.

Individual locations were not disclosed. The divestiture plan also includes 104 stores in Washington state and 13 from the Albertsons portfolio in Idaho.

The deal will give an enlarged retail operation of more than 500 stores to the private company.

C&S, which was founded in 1918, is a supplier to independent grocery stores, supplying more than 7,500 independent supermarkets, retail chain stores and military bases. It currently runs Grand Union grocery stores and Piggly Wiggly franchise and corporate-owned stores in the Midwest, the Carolinas, New York and Vermont.

It also operates a wholesale warehouse in Troutdale.

The divestiture is part of a move to mollify antitrust regulars at the Federal Trade Commission.

Kroger, the nation’s largest supermarket chain, which bought Fred Meyer in 1998, announced plans in October to buy its next largest competitor, Albertsons Cos. Inc., in a $24.6 billion deal. The deal is targeted to close early next year.

The Pacific Northwest is one of the regions where the two companies compete directly, so the combination could leave Oregonians with fewer choices for grocery shopping. In Oregon, Kroger and Albertsons are two of the biggest grocery chains, with a combined market share that’s even bigger than Walmart.

The Oregonian/OregonLive identified roughly 33 Kroger and Albertsons-owned stores across the state that sit within a mile of one another, including 20 in the Portland metro area. More than 100 are less than two miles apart.

Many are within line-of-sight of a neighboring store. In Oregon City, for example, a Fred Meyer, Safeway and Albertsons are within blocks of one another.

Kroger and Albertsons are two of the state’s biggest grocery chains, with 171 stores altogether.

The acquisition, which the companies say would allow them to take on the likes of Walmart and Amazon, comes as shoppers continue to battle historic inflation at grocery stores.

The deal contemplates the possibility that regulators may balk at the merger plan and demand more store divestitures.

Before the deal with C&S closes, “Kroger may, in connection with securing FTC and other governmental clearance, require C&S to purchase up to an additional 237 stores in certain geographies,” the companies said in the news release.

The companies said that if more stores are added to the divestiture plan, C&S will pay Kroger additional cash that has yet to be determined.

C&S has prior experience with divestitures related to mergers and has successfully transitioned union employees and their associated collective bargaining agreements in the past.

“Importantly in our agreement, C&S commits to honoring all collective bargaining agreements which include industry-leading benefits, retaining frontline associates and further investing for growth,” Kroger CEO Rodney McMullen said in a statement on Friday.

Stores in 17 states and the District of Columbia will be affected:

104 Albertsons Cos. and Kroger stores in Washington

66 Albertsons Cos. and Kroger stores in California

52 Albertsons Cos. stores in Colorado

49 Albertsons Cos. and Kroger stores in Oregon

28 Albertsons Cos. stores in Texas and Louisiana

24 Albertsons Cos. stores in Arizona

15 Albertsons Cos. stores in Nevada

14 Kroger stores in Illinois

14 Albertsons Cos. stores in Alaska

13 Albertsons Cos. stores in Idaho

12 Albertsons Cos. stores in New Mexico

12 Albertsons Cos. stores in Montana, Utah and Wyoming

10 Harris Teeter stores in Washington, DC, Maryland and Virginia

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