Last updated on December 12th, 2024
C&S Wholesale Grocers has entered into a definitive agreement to purchase 413 stores, eight distribution centers and two offices that have become available in connection with the proposed merger of The Kroger Co. and Albertsons Companies Inc.
Subject to fulfillment of customary closing conditions, including FTC and other governmental clearance, and the completion of the proposed merger, C&S will pay Kroger an all-cash consideration of approximately $1.9 billion, including customary adjustments.
Prior to the closing, 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. If additional stores are added to the transaction, C&S will pay to Kroger additional cash consideration based upon an agreed upon formula.
C&S will acquire QFC, Mariano’s and Carrs brand names and the exclusive licensing rights to the Albertsons brand name in Arizona, California, Colorado and Wyoming. An affiliate of C&S Wholesale Grocers, 1918 Winter Street Partners, will operate these stores.
C&S will also add five private labels to its current brand portfolio.
“With more than 104 years in the rapidly changing grocery industry, the foundation of C&S’s success has been our ability to innovate. Our fast-paced industry challenges us to continue to think differently about our business model and how we meet the needs of our consumers, employees and communities — now and for generations to come,” said Rick Cohen, executive chairman of Keene, New Hampshire-based C&S Wholesale Grocers.
The agreement is set to close in early 2024, subject to regulatory clearance and customary closing conditions.
C&S will continue to recognize the union workforce and maintain all collective bargaining agreements and is committed to retaining frontline employees and further investing for growth. This divestiture plan marks a key next step toward the completion of the Kroger/Albertsons proposed merger. The divestiture plan ensures no stores will close as a result of the merger, according to a press release from Kroger and Albertsons. Associates will continue to receive health care and pension benefits alongside bargained-for wages, the release stated.
“Following the announcement of our proposed merger with Albertsons Cos., we embarked on a robust and thoughtful process to identify a well-capitalized buyer who will operate as a fierce competitor and ensure divested stores and their associates will continue serving their communities in the ways they do today. C&S achieves all these objectives,” said Rodney McMullen, chairman and CEO of The Kroger Co.
“C&S is led by an experienced management team with an extensive background in food retail and distribution and has the financial strength to continue investing in associates and the business for the long run. 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.”
Eric Winn, chief operating officer and designated CEO of C&S Wholesale Grocers, said the purchase is an opportunity for the company to expand into the retail market, an important component of its long-term growth.
“We have a strong foundation of retail experience with our Piggly Wiggly franchise and corporate-owned stores in the Midwest and Carolinas and the reopening of our iconic Grand Union – totaling more than 160 retail locations – all of which demonstrate C&S’s ability to deliver solid retail performance This will also further enhance C&S’s ability to serve our customers as we will be in a unique position as a leading wholesale supplier and retailer to help grow their business and continue our legacy of braggingly happy customers,” Winn said.
The divestiture plan fulfills the commitments Kroger and Albertsons Cos. set out in their original merger agreement in October 2022 with regard to divesting stores.
C&S brings experience with the merger process, having been an FTC approved divestiture buyer in prior grocery transactions with a strong track record of transitioning union employees and their associated collective bargaining agreements successfully.
The terms of the plan support C&S’s ability to operate divested stores effectively and efficiently by providing:
- Strong teams with deep industry expertise and the ability to operate at scale and to drive growth and operational advancements in the divested business;
- A cohesive set of stores in each geography supported by two regional headquarters as well as banners, and private label brands with strong consumer recognition that will provide C&S with an established base on which to grow its store network; and
- A robust operational infrastructure, including distribution centers and offices to support both the immediate and long-term success of the divested business.
“I have long respected C&S and its leadership team,” said Vivek Sankaran, CEO of Albertsons Companies. “I am thrilled that C&S’s outstanding capabilities and financial strength will ensure these divestiture stores can continue to grow and serve their communities as they do today. Most importantly, they have made a clear commitment to continuing to invest in and care for associates, including by honoring all collective bargaining agreements currently in place. I echo Rodney’s confidence in the bright future ahead for the associates joining the C&S team.”
Stores currently under the QFC, Mariano’s and Carrs banners that are retained by Kroger will be re-bannered into one of the retained Kroger or Albertsons Cos. banners following the close of the transaction.
In the four states where C&S will have the license to the Albertsons banner, Kroger will re-banner the retained stores following the close of the proposed merger with Albertsons Cos. Kroger will maintain the Albertsons banner in the remaining states. In addition, Kroger will divest the Debi Lilly Design, Primo Taglio, Open Nature, ReadyMeals and Waterfront Bistro private label brands.
The number of stores contained in the divestiture plan by geography is as follows:
- WA: 104 Albertsons Cos. and Kroger stores
- CA: 66 Albertsons Cos. and Kroger stores
- CO: 52 Albertsons Cos. stores
- OR: 49 Albertsons Cos. and Kroger stores
- TX/LA: 28 Albertsons Cos. stores
- AZ: 24 Albertsons Cos. stores
- NV: 15 Albertsons Cos. stores
- IL: 14 Kroger stores
- AK: 14 Albertsons Cos. stores
- ID: 13 Albertsons Cos. stores
- NM: 12 Albertsons Cos. stores
- MT/UT/WY: 12 Albertsons Cos. stores
- DC/MD/VA: 10 Harris Teeter stores
The above stores (regardless of banner) will be divested by Kroger following the closing of the proposed merger with Albertsons Cos.
“C&S is invested in the communities where we live and work. Our retail locations are a critical resource not only for necessities but also as an integral part of the local area they serve. We look forward to welcoming our new employees into the C&S family of companies and leveraging C&S’s strong heritage of selection, value and customer service to continue our mission of keeping our communities fed,” said Mark McGowan, president of retail, C&S Wholesale Grocers.
As a result of the comprehensive divestiture plan, Kroger has exercised its right under the proposed merger agreement to sell what would have been the SpinCo business to C&S. Consequently, the spin-off previously contemplated by Kroger and Albertsons Cos. is no longer a requirement under the merger agreement and will no longer be pursued by Kroger and Albertsons Cos.
The divestiture plan is another key step toward the completion of the proposed merger between Kroger and Albertsons Companies.
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