wnetmacman wrote: ↑January 9th, 2024, 11:33 am
CalItalian wrote: ↑January 9th, 2024, 9:30 am
They are not talking about anything other than the FTC extending the deadline beyond January 17. This is complete silliness. The FTC and multiple states are going to sue to block it.
Yet the FTC has indeed allowed a lot of other silliness over the last two decades that has not been allowed before. I would wait before you automatically write this one off. I know it would create a giant monster, but the government loves giant monsters these days.
I think there are many legitimate arguments against the merger, and there are many legitimate arguments for the merger. It is not as black and white as it seems on the surface.
Some of the most worrisome arguments do not make sense, the largest being concern of hundreds or thousands of stores closing and consolidating - when the price being paid per store is so substantial that the loss from liquidating/closing/severing lease etc. is so high that the only possible return on investment is to operate the store through the entire lease term.
The largest issues I have at this point are the following:
1) C&S should not have exclusive rights to divested stores. There should be an auction process on a store by store, or maybe region by region market with required commitment to operate by the buyer. A new weakling competitor like Haggen is not an adequate remedy for overlaps and if qualified local competition like Stater Bros wants to buy a large batch of stores they should be prioritized over C&S as long as they commit to operate and have the money to do so.
2) Anticompetitive behaviors must be stopped, and substantial and enforceable penalties must be in place. Specifically, if a store is closed it must be made available to the competition to operate as a full service supermarket even if that means an ethnic operator. No dead leases, no dead rent, no deals like the one where it seems Albertsons hands off unwanted stores to a gym that immediately destroys the costly grocery store infrastructure like refrigeration. If they don't want the store they may not do anything to prevent another grocery store from taking the spot. And all non compete agreements should be canceled or scaled back to only exclude direct full service competitors in the same exact center, not to include Walmart or Target etc. and force them to have a reduced assortment of foods.
3) Leadership at Kroger needs to change (this is something investors need to push back on). They demonstrate a lack of willingness to invest in the business, and are allowing poor conditions. If their intent is to run everything the Kroger way then the entire enterprise is going to collapse like a house of cards. They must approach with a merger of equals style deal where the best teams take over and best ideas win. For store brand we know Kroger wins all around and should run such operations; for the field operations I think Albertsons people are far more qualified to improve store conditions and clean up the deteriorating/inconsistent divisions like Ralphs and Smiths, while their counterparts at more successful divisions like Frys, FM, and King Soopers should be running things in those areas. I could make the argument that all of the merchandising processes should be taken over by Albertsons people who would quickly remove clutter and nonsense displays as they make room for customers to actually walk around the store (what a concept!) versus the crowded and difficult to navigate Kroger formats.
