🛒 Kroger-Albertsons Merger: National Impact

[ClownLoach]

This might be a crazy thought but if the merger doesn’t happen, do you think Albertsons might try to buy Rite Aid out of bankruptcy? I’m thinking that looking in retrospect, Rite Aid shareholders wouldn’t be holding worthless stock right now had they allowed the Albertsons Rite Aid merger to happen!

No because it has already been bought by the banks. It's not for sale. I think the banks intend to hold on for several years based on the way they are aggressive in negotiating all new leases.

[ClownLoach]

More merger news:

FTC decision on Kroger/Albertsons merger won’t happen by December 15: https://seekingalpha.com/news/4044768-f ... ext-report


By telling the Feds that the requirements have been met, Kroger is really raising the “Mission Accomplished” banner, figuratively speaking. That’s all I have to say for now.

I am wondering if they will follow the path of Speedway/7-Eleven and try to self-divest and just merge without FTC approval then after the FTC whimpered and just approves whatever Kroger/Albertsons cook up on their own. I wonder if the unions/AGs could file some kind of injunction that would prevent that from actually happening. Obviously with Speedway/7-Eleven no union involved and stores with only a handfull of employees it was a different situation and they were able to push through the combination without FTC approval when nobody was even paying attention and found willing buyers to buy the stores.

Isn't that exactly what they're doing? The entire C&S deal is self divesting. Having said that I'd rather see them make divest location decisions versus the government as they did such a horrible job the last two big mergers. Locations kept across the street from each other while in other places locations over ten miles apart divested. What I don't approve of is letting them force one buyer for everything. I think every location being divested should be able to be bought at auction by any buyer that is determined to be eligible.

[storewanderer]

This might be a crazy thought but if the merger doesn’t happen, do you think Albertsons might try to buy Rite Aid out of bankruptcy? I’m thinking that looking in retrospect, Rite Aid shareholders wouldn’t be holding worthless stock right now had they allowed the Albertsons Rite Aid merger to happen!

No because it has already been bought by the banks. It's not for sale. I think the banks intend to hold on for several years based on the way they are aggressive in negotiating all new leases.

Rite AId shareholders didn't get to actually have any vote counted/released on the merger with Albertsons. It was called off right before a vote was to occur.

I think something came down in the background about the Rite Aid sale of territories to Walgreens and some kind of a non compete agreement. Questions were raised as to how that would work bringing all of Albertsons into it and would the merged entity be subject to such a non compete agreement.

The other issue that never came up was the amount of pharmacy divests that would have been necessary across rural communities out west. Of course now Rite Aid has closed ~100 of those rural stores where the only other pharmacy was a Safeway chain so in a sense the lack of competition happened anyway and in a much cheaper way for Safeway.

[storewanderer]

More merger news:

FTC decision on Kroger/Albertsons merger won’t happen by December 15: https://seekingalpha.com/news/4044768-f ... ext-report


By telling the Feds that the requirements have been met, Kroger is really raising the “Mission Accomplished” banner, figuratively speaking. That’s all I have to say for now.

I am wondering if they will follow the path of Speedway/7-Eleven and try to self-divest and just merge without FTC approval then after the FTC whimpered and just approves whatever Kroger/Albertsons cook up on their own. I wonder if the unions/AGs could file some kind of injunction that would prevent that from actually happening. Obviously with Speedway/7-Eleven no union involved and stores with only a handfull of employees it was a different situation and they were able to push through the combination without FTC approval when nobody was even paying attention and found willing buyers to buy the stores.

Isn't that exactly what they're doing? The entire C&S deal is self divesting. Having said that I'd rather see them make divest location decisions versus the government as they did such a horrible job the last two big mergers. Locations kept across the street from each other while in other places locations over ten miles apart divested. What I don't approve of is letting them force one buyer for everything. I think every location being divested should be able to be bought at auction by any buyer that is determined to be eligible.

Until they actually physically transfer the stores/distribution centers to C&S I assume they have identified C&S as a buyer and want to go through the FTC approval process with C&S as their identified buyer for FTC approval.

7-Eleven found buyers and actually sold the stores/stations to those buyers without FTC approval at the time they did the sales.

I like the auction idea but one thing there is it would make it difficult to enter any new competitors into the divested markets to replace the lost "merging" competitor.
But then again when we consider Raleys in Las Vegas, Raleys in New Mexico, Smiths in Montana, Smiths in Wyoming, Ralphs in NorCal, Haggen in CA/NV/AZ/OR/most of WA, Alaska's Marketplace in Alaska, Cerberus Cub in Chicago, maybe this idea of "create a new competitor to replace the lost competitor" isn't really a good idea...

[HCal]

[Softbank is a financier. If Kroger were backed by Wells Fargo it would make just as little sense to say Wells Fargo is really buying Albertsons.

I know that, but my point was that Softbank is, more than C&S, the party that will benefit here. I doubt C&S was actually interested in this deal, as they are not really a retailer and have no track record or interest in operating hundreds of supermarkets. More likely, Softbank wanted to invest in some real estate, saw an opportunity, and got C&S to act as a vehicle to do so. If these divests are later sold, they will get a good ROI on their investment.

[storewanderer]

[Softbank is a financier. If Kroger were backed by Wells Fargo it would make just as little sense to say Wells Fargo is really buying Albertsons.

I know that, but my point was that Softbank is, more than C&S, the party that will benefit here. I doubt C&S was actually interested in this deal, as they are not really a retailer and have no track record or interest in operating hundreds of supermarkets. More likely, Softbank wanted to invest in some real estate, saw an opportunity, and got C&S to act as a vehicle to do so. If these divests are later sold, they will get a good ROI on their investment.

Study how C&S handled the Fleming assets... they didn't end up keeping much and had buyers lined up pretty quickly,

But I think they have committed to operating these divested stores for the long haul, or is that just news articles that have interpreted that to be the case somehow?

Another thing I am wondering is will C&S be just that where they take everything then quickly parcel it out? Maybe that is where some of these other parties like Save Mart, Ahold, Apollo, etc. will come in and buy some stores.

If there is any territory I expect C&S to actually keep and operate itself it will be OR/WA/ID. They will not have the stores to be viable or the markets are just lousy (stores spread too far, difficult markets, etc.) in CA/NV/AZ/TX/CO/WY/UT/MT/NM. I am hoping Bob Mariano can end up getting Mariano's back, they just merged Dom's with something else. As far as the little block of H-T Stores getting divested in Mid Atlantic to C&S I can't see how someone else running H-T units will work out.

[pseudo3d]

I am wondering if they will follow the path of Speedway/7-Eleven and try to self-divest and just merge without FTC approval then after the FTC whimpered and just approves whatever Kroger/Albertsons cook up on their own. I wonder if the unions/AGs could file some kind of injunction that would prevent that from actually happening. Obviously with Speedway/7-Eleven no union involved and stores with only a handfull of employees it was a different situation and they were able to push through the combination without FTC approval when nobody was even paying attention and found willing buyers to buy the stores.

Isn't that exactly what they're doing? The entire C&S deal is self divesting. Having said that I'd rather see them make divest location decisions versus the government as they did such a horrible job the last two big mergers. Locations kept across the street from each other while in other places locations over ten miles apart divested. What I don't approve of is letting them force one buyer for everything. I think every location being divested should be able to be bought at auction by any buyer that is determined to be eligible.

Until they actually physically transfer the stores/distribution centers to C&S I assume they have identified C&S as a buyer and want to go through the FTC approval process with C&S as their identified buyer for FTC approval.

7-Eleven found buyers and actually sold the stores/stations to those buyers without FTC approval at the time they did the sales.

I like the auction idea but one thing there is it would make it difficult to enter any new competitors into the divested markets to replace the lost "merging" competitor.
But then again when we consider Raleys in Las Vegas, Raleys in New Mexico, Smiths in Montana, Smiths in Wyoming, Ralphs in NorCal, Haggen in CA/NV/AZ/OR/most of WA, Alaska's Marketplace in Alaska, Cerberus Cub in Chicago, maybe this idea of "create a new competitor to replace the lost competitor" isn't really a good idea...

Gas stations have a lot of competitition in the market and precedent for gas stations is pretty lax anyway. Circle K did a sweep of a bunch of Baton Rouge stores when it already had several stores, then acquired other operators like Corner Store and Cracker Barrel (the c-store chain, not the restaurant).

[HCal]

But I think they have committed to operating these divested stores for the long haul, or is that just news articles that have interpreted that to be the case somehow?

Of course they are going to tell the media that. If they said they plan to sell or close the stores, various parties would object (unions, state AGs, etc.) and the merger would be dead.

I would only trust a committment to operate these stores for the long haul if it were written into the agreement, with substantial penalties for non-compliance. But of course, they will never agree to that.

[storewanderer]

But I think they have committed to operating these divested stores for the long haul, or is that just news articles that have interpreted that to be the case somehow?

Of course they are going to tell the media that. If they said they plan to sell or close the stores, various parties would object (unions, state AGs, etc.) and the merger would be dead.

I would only trust a committment to operate these stores for the long haul if it were written into the agreement, with substantial penalties for non-compliance. But of course, they will never agree to that.

Back in the 1999 ASC/Albertsons merger the buyers had to promise to keep the stores open for 10 years after they bought them as I recall. They also had to get FTC approval if they acquired any new land sites/proposed any new stores within the "areas" (not sure what that meant, zip code?) where stores had been divested.

The other thing I'd say is if C&S is not operating the stores well and then let's go with SoCal sells them to a stronger operator like Stater then that could be for the better of all involved. But if the stores end up as Smart & Final Extra units then I would say that is a very bad thing as those are not a conventional supermarket, lack most service departments, are not Unionized, do not offer services like Pharmacy, etc.

I'd say write something into the deal requiring the stores to remain as Unionized supermarkets for a certain time period (perhaps 10 years) but the problem I see is the parties who operate Unionized supermarkets aren't expanding, they are contracting. So I think such a rule would result in a lot of dark stores and killed shopping centers.

The best solution continues to be to have this merger canceled, to preserve competitive choices for consumers and not put so many "eggs into one basket" for the Unionized grocery employees to be so concentrated with a single employer-Kroger.

[storewanderer]

The Cigna Humana merger has fallen apart as the two parties failed to agree on price. This is good news as now FTC will not have to deal with this.

https://finance.yahoo.com/news/1-us-hea ... 54440.html

This merger falling apart had NOTHING to do with the current FTC, it never got to them.

Let's see if they try to take credit for it not happening.