Back to Rodney's comments, the C&S deal is not going to satisfy the FTC review of the P&L. Which is why I think it's just a straight store dump of loser stores. It sounds like the kind of deal where they could happily execute it and have no regrets if the merger deal is killed the next week.storewanderer wrote: ↑September 7th, 2023, 12:36 amI am not actually sure who could be more effective with F4L: C&S or Save Mart. Food Maxx and franchise F4L are so similar I think it is a bit of a toss up as to which is worse. Neither will do as well as Kroger F4L does due to higher prices/smaller mix/inferior private label program/inferior perimeter program compared to Kroger F4L.ClownLoach wrote: ↑September 6th, 2023, 11:36 pm
Totally agree C&S is a joke, but I think that the other shoe will drop and it's going to be Save Mart getting the majority of the SoCal locations being divested. Every article so far has been clear that most of the stores going to C&S are PNW and Mountains. Like I mentioned before I think they're taking those two areas they can work with, plus the reject stores that would probably be closed in a typical merger deal. So I think they get some quality units in the PNW, mixed with worthless QFC and the worst units in SoCal which again are the closure bait type spots that ACI has been stringing along for no good reason.
The more complicated SoCal situation would be a strong area of focus for the FTC and that's why I think a second deal is going to be announced. The absence of Apollo financing in the first deal is the giveaway to me... They didn't just walk in and sink a bunch of money into Albertsons to influence a deal in which their stores get sold piecemeal for pennies. They came in to make money and debt peddling is how they make their profits.
Fact is that this deal indicates that the high interest rates out there have scuttled any legitimate buyers from purchasing these stores (with the possible exception of Save Mart coming for SoCal which I still think is in the works). So this is the absolute best they could come up with, a non operator which the FTC is going to question until they fall apart.
I think this first deal is a straight dump of stores that frankly were going to be dumped anyway, merger, no merger, merger without the silly no closure promise, etc. I do not believe we will find anything surprising when a list of stores comes out.
A second deal with Save Mart still just seems like a sure thing. Even with the recent negative feedback from observers up there I think they would be better off expanding their chain with some productive SoCal stores which will give them a greater scale and buying power. And they have the only banner that could potentially work it's way into SoCal without people questioning it, all the acquired stores get the Lucky name. But I think that deal will be fully contingent on a KR-ACI merger being completed. No merger, no sale.
It is possible the FTC may be blocking Apollo from financing someone and that could be why some potential regional chain buyers may not be having success. As recently as a few weeks ago Kroger CEO Rodney said something to the effect of the FTC will look at the balance sheets of the buyers and the divests will make regional chains who take them over stronger. And now this week we have a completely inexperienced buyer with no successful tract record operating stores at all let alone in these territories supposedly buying almost all of the divests?
C&S is good at storing goods for people like Target who don't have their own perishables warehouses and good at operating warehouses for larger chains but that is where their expertise seems to end. Private label, merchandising- just not good enough. Programs for fresh products- absolutely terrible. I have no idea how they will be able to run former Safeway units successfully (which is what I expect the majority of what they get to be).
C&S deal is similar to the deal which 7-Eleven did to just wipe overlaps off the map (which ironically has worked too well, I can point out some examples where now a ultra busy intersection has two Jackson's stations). They removed the overlaps that they wanted removed themselves so that there was no need for a discussion with the FTC. Seeing how poorly the FTC has handled these it's not a bad idea, especially with rural areas and high growth areas where the obsolete Zip code system based on population distribution over 70 years ago (!!!) was used to determine overlaps (which enabled stores across the street from each other to stay, but considered stores over ten miles apart in different cities to be overlaps in the Safeway-Albertsons deal). Basically this is an end run around the promise of no store closures etc because it's a Pre merger purge of stores which one way or another have no good future I'm sure...
This is another reason why I think there's a second deal coming which will have contingencies attached which attach it to the merger, and that will be the one with the more complicated markets attached that will be scrutinized by the FTC.
