Kroger Co. (KR) and Albertsons Companies Inc. (ACI) have announced a joint agreement to sell 413 stores and 8 distribution centers across 17 states as part of Kroger’s acquisition of Albertsons. The sale, which is valued at $1.9 billion in cash, is aimed at gaining regulatory approval for the merger.
No Closures, Job Security, and Vital Benefits
As part of the comprehensive divestiture plan, the sale includes 2 offices and 5 private label brands. Both companies emphasized that this plan guarantees no store closures due to the merger. Furthermore, all frontline associates will retain their employment, with existing collective bargaining agreements, industry-leading healthcare and pension benefits, and bargained-for wages remaining intact.
Expansion into New Geographies
Kroger and Albertsons expressed their belief that this divestiture plan will extend a well-capitalized competitor into new geographies. By selling to C&S Wholesale Grocers LLC, they aim to continue providing quality products and services to customers in these regions.
Following the announcement, Kroger’s stock experienced a 1.8% decline in premarket trading, while Albertsons’ shares saw a 0.6% gain. Notably, Kroger’s second-quarter sales fell short of expectations and the company recorded a $1.4 billion charge during the same period to settle a majority of the opioid claims against them.
Overall, this strategic maneuver represents a significant step toward the completion of the merger between Kroger and Albertsons, while safeguarding job security and ensuring the provision of essential employment benefits to associates.