(CN) — Two of the U.S.’s largest grocery store chains, Kroger and Albertsons, have announced the sale of over 400 stores and handful of brands, distribution centers and other assets to a competitor and wholesaler in advance of a planned merger.
The sale, according to a press release issued by the chains, will see New Hampshire-based C&S Wholesale Grocers pay approximately $1.9 billion for the stores, plus five private label brands, eight distribution centers and a pair of offices, all spread across 17 states and the District of Columbia.
C&S already runs Grand Union and Piggly Wiggly grocery stores in the Midwest and the Carolinas, and supplies over 7,500 independent supermarkets, retail stores and military bases.
Kroger and Albertsons, which announced a planned $24.6 billion merger last fall, hailed the sale as a “key next step toward the completion of the merger by extending a well-capitalized competitor into new geographies.” If regulators required it, the wholesaler could be required to purchase up to 237 additional stores with additional cash calculated by an agreed-upon formula.
The stores to be sold include 104 in Washington, 66 in California, 52 in Colorado, 49 in Oregon, 28 in Texas and Louisiana, 24 in Arizona, 15 in Nevada, 14 in Illinois, 14 in Alaska, 13 in Idaho, 12 in New Mexico, 12 in Montana, Utah and Wyoming and 10 in DC, Maryland and Virginia. Thanks the sales, none of those stores would be closed as a result of the merger, according to the press release. Existing collective bargaining agreements would also remain in place.
The companies plan to close on their merger early next year, “subject to the receipt of required regulatory clearance and other customary closing conditions. Those include approval from the Department of Justice’s antitrust division and from the Federal Trade Commission.
A coalition of attorneys general from seven states has asked the Federal Trade Commission to block the deal, Grocery Dive reports, and organizations like the National Grocers Association have expressed concerns about the potential for a company with Kroger and Albertsons’ combined market share to abuse that power.
At the time of the merger’s announcement late last year, Boise-based Albertsons controlled just over 4% of the grocery market, while Cincinnati-based Kroger had reached a three-year low at 6.7%, according to industry publication Supermarket News. Counting the 413 stores to be sold, the merger would have included almost 5,000 stores and more than 710,000 employees, and made the combined company the second-largest grocery retailer in the U.S., beaten out only by Walmart. Washington-based Costco, currently beating out each of the to-be-merged chains with a 9% market share, would be pushed to third place.
The Friday morning announcement, according to CNBC, created a slight market boost for Albertsons, raising its stock price by over 2% while Kroger’s fell slightly.
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