🛒 Kroger-Albertsons Merger: National Impact

[ClownLoach]

I still think they have this backwards out west… SpinCo based on Fred Meyer/Smith’s/Ralph’s/Fry’s/King Soopers would probably be the best thing. I’m not quite sure what they do in Utah and Montana though - possibly keep the Smith’s name there? In this scenario, Kroger gets all the Safeway locations, and operates pure grocery. Marketplace stores could theoretically go to SpinCo.

So... They spend $25 billion dollars to shrink the company? What a deal! Not going to happen. Productivity outside of California at these Kroger stores is superior to Albertsons. They're going to ask to divest Albertsons properties for the most part, not their own.

It is clear the critical hang up with the authorities is the quality of the purchaser of the divestitures, not so much the quantity of stores. The government is more concerned about the stores staying open and competitive. That makes me believe C&S is out completely as nobody takes them seriously and the statements of the CEO make such a stink they cannot recover credibility ("Should we say we are going to keep them open? Do we have to commit to running these?") C&S was getting these stores at liquidation value, pretty much what Hilco or Great American would pay for the right to close them. They could have taken the keys and started going out of business sales immediately, nobody could stop them and they'd probably make a profit on the shutdown.

Spinco was a preposterous idea that makes even less sense than the C&S deal. If the government thinks C&S isn't enough of a proven and experienced owner, what exactly would Spinco bring, a company that doesn't even exist yet? Why would anybody trust Kroger would cast off their best and brightest leaders to form Spinco, the new Titanic of grocery-specific retail. They would spin off the worst stores and the worst employees with the worst performance track record to run Spinco into the ground. And please don't start the whole "they'll make Spinco and XYZ Foods will buy the company!" because no competitor is going to pay more for these stores than what they would have sold for in the C&S sweetheart deal... Fact is Kroger needs them to buy more than they need to buy Kroger's merger castoffs. I expect some of these stores to go for as little as a dollar to the most shrewd operators.

There is no merger, period, unless the authorities are satisfied with the QUALITY and EXPERIENCE LEVEL of the buyers of these divestitures. That means they can't try to pawn off these stores to a loser like C&S, and they have to actually sell them to real competitors who fully intend to operate them and do everything in their power to kick Kroger's butt.

I expect to see some experienced operator(s) emerge as the new buyers of these divestitures. Stater and Raley's in California/Nevada/Arizona. Not sure who in Washington and Oregon but maybe someone wants to come out West or Raley's wants a chance at going North with a bargain entry "once in a lifetime discount."

Furthermore, I would not be surprised if Kroger tries their hand at working with the feds and most aggressive states to potentially sell FEWER stores than their initial plans even if they might be forced to sell a few crown jewels. Remember that anything they were selling to C&S was a unwanted store, not a store that would necessarily require divestiture. They might be better off entirely by working with the authorities instead of trying to work around them.

[storewanderer]

I still think they have this backwards out west… SpinCo based on Fred Meyer/Smith’s/Ralph’s/Fry’s/King Soopers would probably be the best thing. I’m not quite sure what they do in Utah and Montana though - possibly keep the Smith’s name there? In this scenario, Kroger gets all the Safeway locations, and operates pure grocery. Marketplace stores could theoretically go to SpinCo.

The problem is Kroger's expertise is not at running "pure grocery" in a 30k-50k square foot Safeway-type format. This is evidenced by the situation with Ralphs and QFC who have closed so many stores over the years. Kroger is better with these bigger 60k square foot+ full food/drug combo type stores. Smiths, Frys, and King Soopers represent the type of store model that Kroger is most effective at running and that is part of why at least in the initial transaction with C&S you saw that zero stores are being divested out of those 3 Kroger divisions.

But they have no problem divesting stores from QFC, Ralphs/F4L, Mariano's, Harris Teeter, and some IL Krogers (not great stores..).

If they did a total spinoff of Fred Meyer/Smiths/Ralphs/QFC it may make some sense from the perspective that a "Spinco" made up of those assets could possibly stand alone; it would basically be the old Fred Meyer. However Smiths doesn't fit well in with Ralphs/Fred Meyer so that would not go well for Smiths. You try to run Smiths like Ralphs (HIGH prices, not much stuff out on perimeters, less private label) and Smiths is going to lose 50% of its sales overnight. I'm not sure how well Ralphs and Fred Meyer fit together either. So that seems like a bit of a misfit situation.

I do not see any possible scenario where it makes any sense to divest King Soopers or Frys. Why would Kroger get rid of strong stores in exchange for VERY weak CO Safeway units and marginal at best AZ Safeway units? It just wouldn't make sense. Sure, Kroger would gain access to a dozen or so rural communities in each state that they aren't currently in, but is it worth losing highly productive metro Denver/metro Phoenix Stores and taking on struggling Safeway stores in those metros, to get some medium volume rural stores in exchange?

[veteran+]

I doubt C&S is out, I think this just gets them more stores. They have a signed purchase agreement and until FTC formally denies them as a buyer I do not see them going away. Great deal for C&S. If I were them no way I'd be "out" with the bargain price...

If C&S does go away I expect SpinCo to resurface as an idea.

Sort of like you know the hot dog eating contest where someone ate 400 hot dogs and is queasy but kept them all down and is still coherent, but they decide to eat 200 more hot dogs and.... yeah. Divesting more stores to C&S is only going to cause more pain.

I think that if the plan was just to "give C&S 200 more stores and this can go through" then that would've been done months ago. All those stores are going to be marginal so it's probably C&S's reluctance than Kroger's hoarding.

Problem is those 200 extra stores are still under contract by C&S with right of first refusal. So now Kroger effectively has three options:
1. Renegotiate the contract to free up those extra 200 stores for new buyers (which will be hard).
2. Add additional stores beyond the 600+ from C&S to divest (which Kroger would be reluctant to do, as those would cut into better stores).
3. Go with the original plan A and renegotiate the contract so that C&S Wholesale has to buy all 600 stores.

My guess is they'll try to meter out the remaining 230 or so divests based on which states are screaming the loudest. It still won't solve the fundamental issue that C&S is not an adequate competitor and the stores will languish and fail to retain their clientele. The fact is that any store they're voluntarily dumping on C&S is a store that would be closed if they were given full freedom to merge unrestricted.

They know which stores are on the chopping block, they made vague statements of X Kroger brands, Y Albertsons brands per state back when this was first was first announced. They're not going to create new divests in problem states.

I personally hope they're trying to do option 3 and ends up causing C&S to walk away entirely.

I sure hope this causes C&S to disappear from the scheme as well. Nothing that C&S could do with these stores will be beneficial for consumers or employees. It is like sending a live body to the morgue.

[ClownLoach]

I sure hope this causes C&S to disappear from the scheme as well. Nothing that C&S could do with these stores will be beneficial for consumers or employees. It is like sending a live body to the morgue.

Quote of the year candidate here.

I do not believe that any deal involving the divestiture of even one store to C&S will be approved by the government authorities. The fact is that in most markets there is a real, legitimate competitor that is likely drooling over the opportunity to get their hands on some of these stores at a bargain price (potentially as low as $1 which we have seen in the past mergers that were more "transparent" due to the government leading the divestiture process). Kroger and Albertsons cooked up C&S because they were looking for another Haggen type sucker to foist off their problem and unwanted stores to in conjunction with whatever actual overlaps they were forced to sell. Kroger and Albertsons want every one of these stores to close, and the closure to occur in the hands of someone else. Expect the government to take control of the process and end this self divestiture program because Kroger, Albertsons and C&S blew it.

Now you're going to see someone take a risk in Oregon, Washington and Colorado primarily and jump into a market they're not currently a part of. Weren't there rumors of Hy-Vee wanting into Colorado? The Albertsons/Safeway units aren't desirable but they have the money to invest to expand, remodel, rebuild etc. We know Raley's and Save Mart have their problems but either one could take on the PNW and have a better shot at success than C&S especially considering they're going to get these stores for almost nothing. Raleys could strengthen their Arizona business and potentially upgrade aged Bashas units with Albertsons and Safeway buildings, and get into Las Vegas where Albertsons operations felt very tired and uninspired on my last couple of visits. Stater can grow in SoCal and maybe pick up another distribution center to more efficiently handle growth in Los Angeles and San Diego areas they've generally avoided. And if the government running a divestiture program can't find a buyer they like for Washington, Colorado, etc. then they'll go to the judge and say "we need you to order No Deal and end this. Č

The fact is Kroger and Albertsons didn't want real competition to have a crack at buying these stores. They wanted a loser to buy them, and the government is going to say no to any "loser" divestiture proposal. Now they're going to have to consider what reality will look like with strengthened competitors potentially owning stores they wanted to keep if they still want to go on with this merger.

[ClownLoach]

I doubt C&S is out, I think this just gets them more stores. They have a signed purchase agreement and until FTC formally denies them as a buyer I do not see them going away. Great deal for C&S. If I were them no way I'd be "out" with the bargain price...

If C&S does go away I expect SpinCo to resurface as an idea.

Sort of like you know the hot dog eating contest where someone ate 400 hot dogs and is queasy but kept them all down and is still coherent, but they decide to eat 200 more hot dogs and.... yeah. Divesting more stores to C&S is only going to cause more pain.

I think that if the plan was just to "give C&S 200 more stores and this can go through" then that would've been done months ago. All those stores are going to be marginal so it's probably C&S's reluctance than Kroger's hoarding.

Problem is those 200 extra stores are still under contract by C&S with right of first refusal. So now Kroger effectively has three options:
1. Renegotiate the contract to free up those extra 200 stores for new buyers (which will be hard).
2. Add additional stores beyond the 600+ from C&S to divest (which Kroger would be reluctant to do, as those would cut into better stores).
3. Go with the original plan A and renegotiate the contract so that C&S Wholesale has to buy all 600 stores.

My guess is they'll try to meter out the remaining 230 or so divests based on which states are screaming the loudest. It still won't solve the fundamental issue that C&S is not an adequate competitor and the stores will languish and fail to retain their clientele. The fact is that any store they're voluntarily dumping on C&S is a store that would be closed if they were given full freedom to merge unrestricted.

They know which stores are on the chopping block, they made vague statements of X Kroger brands, Y Albertsons brands per state back when this was first was first announced. They're not going to create new divests in problem states.

I personally hope they're trying to do option 3 and ends up causing C&S to walk away entirely.

I'm really confused about the idea of renegotiating the contract with C&S to buy more stores. C&S already has a contract to buy more. C&S is getting these stores for nothing. They will pay less for the entire store than the value of the inventory and equipment. They could easily account as separate LLCs and such then liquidate any store they don't want, then liquidate the LLC through bankruptcy to eliminate any lease. If C&S acquired every possible divest they could turn around and liquidate them all AND make hundreds of millions of dollars in profit instantly. C&S isn't going to need to be negotiated with to buy more. They're going to need to be negotiated with to go away, although I cannot imagine any world where the sale agreement wouldn't have a clause rendering it null and void if the government authorities will not accept them as a qualified buyer.

Remember that not one single store being divested at this point is a store where they were forced to sell it. So it should be assumed every store currently being divested is a store that would otherwise be closed post merger. Any additional stores added at the request of the government authorities would be "better" stores they wanted to keep, and thus would be far more valuable than the first wave.

The entire issue is that C&S has shot their credibility with the statements that came forward which validated all of the government concerns. They have zero interest in actually forming the promised strong competition in the market that Kroger said they would provide. They were buying at liquidation value probably with the intention of running going out of business sales for any store they couldn't flip quickly to a independent "IGA type" retailer who would sign up with them as their wholesaler. The entire intention of divestitures is to maintain competitive markets and they have no interest in providing competition. It really is not even about the number or location of stores at this point, it is the involvement of C&S.

What I am trying to make clear however is the "punishment" Kroger will face, which is that the government authorities will not accept the "enhanced package" and will want to take control of the divestiture process and tell them what stores to sell and to whom. If Kroger wasn't so greedy (trying to both choose what stores to sell AND who would buy them) they might have been able to control the choice of stores. Now they'll be faced with the government potentially telling them to sell the nice King Soopers and keep the crappy Albertsons across the way, sell the busy Ralphs and keep the moldy old Vons and so forth. They no longer have control over the process and as such they will be far less profitable and successful if they still pull off the merger. If they had chosen the stores but let stronger local competitors bid for them I think they could have gotten away with self divestiture, but they blew it with C&S.

[pseudo3d]

I doubt C&S is out, I think this just gets them more stores. They have a signed purchase agreement and until FTC formally denies them as a buyer I do not see them going away. Great deal for C&S. If I were them no way I'd be "out" with the bargain price...

If C&S does go away I expect SpinCo to resurface as an idea.

Sort of like you know the hot dog eating contest where someone ate 400 hot dogs and is queasy but kept them all down and is still coherent, but they decide to eat 200 more hot dogs and.... yeah. Divesting more stores to C&S is only going to cause more pain.

I think that if the plan was just to "give C&S 200 more stores and this can go through" then that would've been done months ago. All those stores are going to be marginal so it's probably C&S's reluctance than Kroger's hoarding.

Problem is those 200 extra stores are still under contract by C&S with right of first refusal. So now Kroger effectively has three options:
1. Renegotiate the contract to free up those extra 200 stores for new buyers (which will be hard).
2. Add additional stores beyond the 600+ from C&S to divest (which Kroger would be reluctant to do, as those would cut into better stores).
3. Go with the original plan A and renegotiate the contract so that C&S Wholesale has to buy all 600 stores.

My guess is they'll try to meter out the remaining 230 or so divests based on which states are screaming the loudest. It still won't solve the fundamental issue that C&S is not an adequate competitor and the stores will languish and fail to retain their clientele. The fact is that any store they're voluntarily dumping on C&S is a store that would be closed if they were given full freedom to merge unrestricted.

They know which stores are on the chopping block, they made vague statements of X Kroger brands, Y Albertsons brands per state back when this was first was first announced. They're not going to create new divests in problem states.

I personally hope they're trying to do option 3 and ends up causing C&S to walk away entirely.

I'm really confused about the idea of renegotiating the contract with C&S to buy more stores. C&S already has a contract to buy more. C&S is getting these stores for nothing. They will pay less for the entire store than the value of the inventory and equipment. They could easily account as separate LLCs and such then liquidate any store they don't want, then liquidate the LLC through bankruptcy to eliminate any lease. If C&S acquired every possible divest they could turn around and liquidate them all AND make hundreds of millions of dollars in profit instantly. C&S isn't going to need to be negotiated with to buy more. They're going to need to be negotiated with to go away, although I cannot imagine any world where the sale agreement wouldn't have a clause rendering it null and void if the government authorities will not accept them as a qualified buyer.

Remember that not one single store being divested at this point is a store where they were forced to sell it. So it should be assumed every store currently being divested is a store that would otherwise be closed post merger. Any additional stores added at the request of the government authorities would be "better" stores they wanted to keep, and thus would be far more valuable than the first wave.

The entire issue is that C&S has shot their credibility with the statements that came forward which validated all of the government concerns. They have zero interest in actually forming the promised strong competition in the market that Kroger said they would provide. They were buying at liquidation value probably with the intention of running going out of business sales for any store they couldn't flip quickly to a independent "IGA type" retailer who would sign up with them as their wholesaler. The entire intention of divestitures is to maintain competitive markets and they have no interest in providing competition. It really is not even about the number or location of stores at this point, it is the involvement of C&S.

What I am trying to make clear however is the "punishment" Kroger will face, which is that the government authorities will not accept the "enhanced package" and will want to take control of the divestiture process and tell them what stores to sell and to whom. If Kroger wasn't so greedy (trying to both choose what stores to sell AND who would buy them) they might have been able to control the choice of stores. Now they'll be faced with the government potentially telling them to sell the nice King Soopers and keep the crappy Albertsons across the way, sell the busy Ralphs and keep the moldy old Vons and so forth. They no longer have control over the process and as such they will be far less profitable and successful if they still pull off the merger. If they had chosen the stores but let stronger local competitors bid for them I think they could have gotten away with self divestiture, but they blew it with C&S.

C&S isn't obliged to buy the extra 200+ stores, they just have first dibs if they (Kroger/Albertsons) have to sell those stores.

I'm not sure if C&S is officially nixed as a buyer, though. The government seems to think so--I'm sure that it would be brought up that their treatment of Bruno's and Grand Union shows that they aren't interested in running operational stores...but they haven't ruled it out.

The fact that Kroger is trying to sell stores and line up buyers themselves isn't too uncommon...the problem is that Kroger/Albertsons wipes out the last strong competitor in most of those markets (besides Costco, Walmart, Target, dollar stores, etc.). The situation with Albertsons/Safeway was very dicey as Haggen collapsed as did their Texas divestment partner (Minyard Sun Fresh Market), but a few were sent out as independents.

[Bluelightspecial]

Just my opinion, but judging from history, my opinion of this merger has changed 180 degrees. I think the merger should be allowed to go through with the amount of divestitures Kroger/Albertsons currently want. C&S may not fail as bad as the Haagan debacle, but it will fail. The simple answer is "demographics". The markets in the major urban areas are much more fragmented than even 10 years ago. For example, if this merger was never proposed think of how many Kroger and Albertsons stores would close in the next 5 years anyway and both chains know it. For some reference, when Vons bought the Safeway southern California division in the late 80s there were close to 400 stores. When Safeway bought it back there was I believe a little over 200 stores. Most, if not all, of the stores in the central valley of California were sold eventually to chains like Vallarta because Safeway/Vons didn't know how to market to that demographic. The same thing is happening in northern Orange County and Phoenix. Albertsons is so weak in Colorado and Houston they should just include all those stores in the "spinoff/sale". My point is that there are so many options for groceries and both chains are dinosaurs dying off already in some markets. If Kroger can merge and get some of the Albertsons gems like northern CA, and Hawaii (which makes more money than some divisions) I think they would be fine with it.

[ClownLoach]

I think that if the plan was just to "give C&S 200 more stores and this can go through" then that would've been done months ago. All those stores are going to be marginal so it's probably C&S's reluctance than Kroger's hoarding.

Problem is those 200 extra stores are still under contract by C&S with right of first refusal. So now Kroger effectively has three options:
1. Renegotiate the contract to free up those extra 200 stores for new buyers (which will be hard).
2. Add additional stores beyond the 600+ from C&S to divest (which Kroger would be reluctant to do, as those would cut into better stores).
3. Go with the original plan A and renegotiate the contract so that C&S Wholesale has to buy all 600 stores.


They know which stores are on the chopping block, they made vague statements of X Kroger brands, Y Albertsons brands per state back when this was first was first announced. They're not going to create new divests in problem states.

I personally hope they're trying to do option 3 and ends up causing C&S to walk away entirely.

I'm really confused about the idea of renegotiating the contract with C&S to buy more stores. C&S already has a contract to buy more. C&S is getting these stores for nothing. They will pay less for the entire store than the value of the inventory and equipment. They could easily account as separate LLCs and such then liquidate any store they don't want, then liquidate the LLC through bankruptcy to eliminate any lease. If C&S acquired every possible divest they could turn around and liquidate them all AND make hundreds of millions of dollars in profit instantly. C&S isn't going to need to be negotiated with to buy more. They're going to need to be negotiated with to go away, although I cannot imagine any world where the sale agreement wouldn't have a clause rendering it null and void if the government authorities will not accept them as a qualified buyer.

Remember that not one single store being divested at this point is a store where they were forced to sell it. So it should be assumed every store currently being divested is a store that would otherwise be closed post merger. Any additional stores added at the request of the government authorities would be "better" stores they wanted to keep, and thus would be far more valuable than the first wave.

The entire issue is that C&S has shot their credibility with the statements that came forward which validated all of the government concerns. They have zero interest in actually forming the promised strong competition in the market that Kroger said they would provide. They were buying at liquidation value probably with the intention of running going out of business sales for any store they couldn't flip quickly to a independent "IGA type" retailer who would sign up with them as their wholesaler. The entire intention of divestitures is to maintain competitive markets and they have no interest in providing competition. It really is not even about the number or location of stores at this point, it is the involvement of C&S.

What I am trying to make clear however is the "punishment" Kroger will face, which is that the government authorities will not accept the "enhanced package" and will want to take control of the divestiture process and tell them what stores to sell and to whom. If Kroger wasn't so greedy (trying to both choose what stores to sell AND who would buy them) they might have been able to control the choice of stores. Now they'll be faced with the government potentially telling them to sell the nice King Soopers and keep the crappy Albertsons across the way, sell the busy Ralphs and keep the moldy old Vons and so forth. They no longer have control over the process and as such they will be far less profitable and successful if they still pull off the merger. If they had chosen the stores but let stronger local competitors bid for them I think they could have gotten away with self divestiture, but they blew it with C&S.

C&S isn't obliged to buy the extra 200+ stores, they just have first dibs if they (Kroger/Albertsons) have to sell those stores.

I'm not sure if C&S is officially nixed as a buyer, though. The government seems to think so--I'm sure that it would be brought up that their treatment of Bruno's and Grand Union shows that they aren't interested in running operational stores...but they haven't ruled it out.

The fact that Kroger is trying to sell stores and line up buyers themselves isn't too uncommon...the problem is that Kroger/Albertsons wipes out the last strong competitor in most of those markets (besides Costco, Walmart, Target, dollar stores, etc.). The situation with Albertsons/Safeway was very dicey as Haggen collapsed as did their Texas divestment partner (Minyard Sun Fresh Market), but a few were sent out as independents.

Per krogeralbertsons.com, C&S is contractually obligated to purchase up to 650 stores. They have to buy anything Kroger shoves their way. They may not refuse. It was part of the original deal. If more than 650 need to go the merger is off per the deal (which makes sense as the cost per store would grow to the point it could exceed the cost to build an Albertsons size chain).

[pseudo3d]

Just my opinion, but judging from history, my opinion of this merger has changed 180 degrees. I think the merger should be allowed to go through with the amount of divestitures Kroger/Albertsons currently want. C&S may not fail as bad as the Haagan debacle, but it will fail. The simple answer is "demographics". The markets in the major urban areas are much more fragmented than even 10 years ago. For example, if this merger was never proposed think of how many Kroger and Albertsons stores would close in the next 5 years anyway and both chains know it. For some reference, when Vons bought the Safeway southern California division in the late 80s there were close to 400 stores. When Safeway bought it back there was I believe a little over 200 stores. Most, if not all, of the stores in the central valley of California were sold eventually to chains like Vallarta because Safeway/Vons didn't know how to market to that demographic. The same thing is happening in northern Orange County and Phoenix. Albertsons is so weak in Colorado and Houston they should just include all those stores in the "spinoff/sale". My point is that there are so many options for groceries and both chains are dinosaurs dying off already in some markets. If Kroger can merge and get some of the Albertsons gems like northern CA, and Hawaii (which makes more money than some divisions) I think they would be fine with it.

Awful take.

There aren't "so many options for groceries". Oh wow! Customers can just go to the dollar store instead! Yeah, no. What's next, considering 7-Eleven a competitor? Imagine if American Stores had tried to argue something similar in the 1980s when they bought Lucky.

Also, when Vons bought the Southern California division, according to the Los Angeles Times, store count for The Vons Cos. with Vons, Tianguis, Pavilions, and the soon-to-rebranded Safeway stores numbering "more than 350 stores", not "close to 400". When Safeway bought the remaining 65% of the company in 1997, there were 320 stores. That's over 30 stores, not 200.

I also think you're overestimating the importance of the Northern California Division. California is an extremely expensive to operate in, and the lackluster performance of Ralphs should indicate that they're not committed in California, and the smaller size of some of the NorCal stores is not Kroger's forte. Besides, if they wanted NorCal so badly, then just go for Save Mart. Likewise, in the case of Houston (can't speak for Colorado), most of the bad stores have been purged, and the remaining stores turn a small profit. They aren't a market leader by any stretch but that's not a bad thing. Besides, with H-E-B's growth in Houston (Kroger has done nothing) they now have a +4 lead on Kroger. Adding Randalls probably won't cannibalize Kroger but it can at least close that gap.

[storewanderer]

Just my opinion, but judging from history, my opinion of this merger has changed 180 degrees. I think the merger should be allowed to go through with the amount of divestitures Kroger/Albertsons currently want. C&S may not fail as bad as the Haagan debacle, but it will fail. The simple answer is "demographics". The markets in the major urban areas are much more fragmented than even 10 years ago. For example, if this merger was never proposed think of how many Kroger and Albertsons stores would close in the next 5 years anyway and both chains know it. For some reference, when Vons bought the Safeway southern California division in the late 80s there were close to 400 stores. When Safeway bought it back there was I believe a little over 200 stores. Most, if not all, of the stores in the central valley of California were sold eventually to chains like Vallarta because Safeway/Vons didn't know how to market to that demographic. The same thing is happening in northern Orange County and Phoenix. Albertsons is so weak in Colorado and Houston they should just include all those stores in the "spinoff/sale". My point is that there are so many options for groceries and both chains are dinosaurs dying off already in some markets. If Kroger can merge and get some of the Albertsons gems like northern CA, and Hawaii (which makes more money than some divisions) I think they would be fine with it.

I am pretty sure Vons was at 325 stores when Safeway bought it in the 90's. Definitely well above 200 stores.

Even today Vons/Pavilions is still slightly above 200 stores.

Albertsons has probably held on to or accepted too poor of performance in certain markets a little too long and Denver and Houston are clearly two of those markets. I think there are some in the East/Northeast too.