🛒 Kroger-Albertsons Merger: Northwest, Rockies, & Alaska Impact

[babs]

Interesting story: https://www.oregonlive.com/business/202 ... ungry.html

Fred Meyer, Albertsons internal documents show fierce competition in Portland before merger talks: ‘We must stay hungry’
Published: Apr. 10, 2024, 10:26 a.m.

By Kristine de Leon | The Oregonian/OregonLive
New filings in the Federal Trade Commission’s lawsuit to block Kroger’s $24.6 billion bid to buy its next largest rival, Albertsons Co., detail the fierce competition between the two companies in Portland.

Kroger is the parent company of Fred Meyer and QFC, while Albertsons owns Safeway. In Portland and other markets where the companies have significant overlap, a fight for market share between the two has helped keep grocery prices down and the quality of products and services up, federal regulators argued in a lawsuit filed on Feb. 21.

“We must stay hungry, sharp and on top of our business. Kroger is hurting and looking to gain share back. WE MUST NOT LET THEM,” Albertsons’s vice president of marketing and merchandising wrote in an internal email about Kroger’s promotional ads in Portland, according to newly unredacted passages in the suit filed in federal court in Portland.

Kroger executives, in turn, refer in internal communications to Albertsons and Safeway stores as their “#1 direct competitor” and “biggest competitors.”

The statements were previously censored over concerns that they contained confidential information that could competitively harm Kroger and Albertsons.

The Federal Trade Commission initially filed a heavily redacted version of its lawsuit to block what would be the largest supermarket merger in U.S. history, along with an unredacted copy that still remains under seal. On Tuesday, the federal court in Portland filed an amended version of the public version of the lawsuit that revealed dozens of previously redacted passages.

The newly unveiled statements contained in the lawsuit adds more texture to the Federal Trade Commission case against the proposed merger, which regulators say would hurt both customers and workers. They argue the deal would reduce competition in the grocery industry, resulting in higher food prices and lower wages for workers, and they lean on the companies’ own words to make the case.

Kroger and Albertsons have structured their deal to introduce a new competitor to the markets where they overlap by selling stores to a grocery supplier, C&S Wholesale Grocers. The much smaller company operates a handful of stores in the Northeast and licenses the Piggly Wiggly brand in the South and Midwest to store operators.

In another newly unsealed statement, a Kroger executive acknowledged after the deal was announced that “Albertsons has made a lot of improvements in many of their stores” in markets that would be impacted by the merger, which regulators say illustrate how the two companies pit themselves against one another, which pushes the grocers to raise their quality and offerings to gain customers.

Other unredacted sections provide a better picture of the government’s case on how a merger would impact unionized stores. Federal regulators argued that Kroger and Albertsons have largely unionized workforces, enabling the unions to pit the competitors against one another to gain leverage during contract negotiations.

Another unredacted passage indicates that an Albertsons’ labor executive refers to Kroger “bargaining competitor” since the two companies “compete for sales and talent while engaging in bargaining with local unions at the same time.”

The Federal Trade Commission alleged that, in 2019, Kroger and Albertsons “successfully coordinated” in negotiations with Portland union workers that led to less favorable wages and working conditions for employees. It also allowed Kroger to “push through” a “reduction in healthcare reserve funding,” according to a newly unredacted passage.

The merger, federal regulators say, would serve to formalize those backchannel strategizing.

“The proposed acquisition is ‘a way out of it’ that would allow (Kroger and Albertsons) to have total alignment in future negotiations, to the detriment of union grocery workers,” federal regulators alleged.

United Food and Commercial Workers Local 555 — which represents the majority of workers at Albertsons, Safeway, Fred Meyer and QFC in Oregon and parts of Washington — endorsed the deal in January, saying that the deal would have a better outcome for workers than Albertsons’ sale to a different buyer.

But the union’s national umbrella and many other local chapters, as well as the Teamsters union that represents warehouse and transportation workers, have opposed the merger.

The newly unredacted complaint also shed more light on regulators’ concerns about Kroger and Albertsons’ divestiture plan. Last fall, the two companies promised to preserve competition under their merger deal by selling more than 400 stores to New Hampshire-based C&S for $1.9 billion. That sale would include at least 49 stores in Oregon.

The Federal Trade Commission argued that C&S lacks the experience in the food retail market and would “face multiple significant obstacles stitching together a viable business” that would make it a viable competitor.

Newly cleared sections suggest that C&S lacks experience running a grocery operation and that “even C&S admits, the proposed divestiture lacks the scale and necessary assets” that Kroger and Albertsons “rely on today to successfully operate their respective businesses.”

While the two supermarket giants and C&S have said that the merger won’t result in store closures, federal regulators alleged that “C&S admits that these commitments have no legally binding effect or duration, and C&S has reserved its right to close or sell supermarkets once the transition is completed.”

In newly uncensored sections, federal regulators cited internal company documents in which C&S contemplated selling the real estate it acquires in the deal, then leasing it back — recouping $1.5 billion of its purchase costs but potentially putting individual stores in a more vulnerable position, subject to the whims of a third-party landlord.

Lauren La Bruno, spokesperson for C&S Wholesale Grocers, said that the company “is deeply committed to our transformation strategy, which includes the expansion of our retail footprint.”

“C&S has 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,” La Bruno added. She also contends that the company has “a strong track record as a successful grocery retailer” that serves 7,500 independent supermarkets, retail chain stores and military bases.

But the Federal Trade Commission argues that C&S currently operates only 23 retail supermarkets — under the Piggly-Wiggly and Grand Union banners — and only one retail pharmacy. The rest of the stores are not operated by C&S, as the company acts as their supplier.

C&S acquired most of the stores it owns and operates in 2021 and 2022, regulators argued, making the company a “poor choice for a divestiture buyer” that would increase the likelihood that the divested stores would “flounder or fail.”

Kroger and Albertsons are two of Oregon’s biggest grocery chains, with more than 170 stores altogether under the Fred Meyer, QFC, Albertsons and Safeway brands. Kroger did not respond to inquiries on Tuesday, and Albertsons officials declined to comment on the lawsuit’s newly unredacted details.

[ClownLoach]

Interesting story: https://www.oregonlive.com/business/202 ... ungry.html

Fred Meyer, Albertsons internal documents show fierce competition in Portland before merger talks: ‘We must stay hungry’
Published: Apr. 10, 2024, 10:26 a.m.

By Kristine de Leon | The Oregonian/OregonLive
New filings in the Federal Trade Commission’s lawsuit to block Kroger’s $24.6 billion bid to buy its next largest rival, Albertsons Co., detail the fierce competition between the two companies in Portland.

Kroger is the parent company of Fred Meyer and QFC, while Albertsons owns Safeway. In Portland and other markets where the companies have significant overlap, a fight for market share between the two has helped keep grocery prices down and the quality of products and services up, federal regulators argued in a lawsuit filed on Feb. 21.

“We must stay hungry, sharp and on top of our business. Kroger is hurting and looking to gain share back. WE MUST NOT LET THEM,” Albertsons’s vice president of marketing and merchandising wrote in an internal email about Kroger’s promotional ads in Portland, according to newly unredacted passages in the suit filed in federal court in Portland.

Kroger executives, in turn, refer in internal communications to Albertsons and Safeway stores as their “#1 direct competitor” and “biggest competitors.”

The statements were previously censored over concerns that they contained confidential information that could competitively harm Kroger and Albertsons.

The Federal Trade Commission initially filed a heavily redacted version of its lawsuit to block what would be the largest supermarket merger in U.S. history, along with an unredacted copy that still remains under seal. On Tuesday, the federal court in Portland filed an amended version of the public version of the lawsuit that revealed dozens of previously redacted passages.

The newly unveiled statements contained in the lawsuit adds more texture to the Federal Trade Commission case against the proposed merger, which regulators say would hurt both customers and workers. They argue the deal would reduce competition in the grocery industry, resulting in higher food prices and lower wages for workers, and they lean on the companies’ own words to make the case.

Kroger and Albertsons have structured their deal to introduce a new competitor to the markets where they overlap by selling stores to a grocery supplier, C&S Wholesale Grocers. The much smaller company operates a handful of stores in the Northeast and licenses the Piggly Wiggly brand in the South and Midwest to store operators.

In another newly unsealed statement, a Kroger executive acknowledged after the deal was announced that “Albertsons has made a lot of improvements in many of their stores” in markets that would be impacted by the merger, which regulators say illustrate how the two companies pit themselves against one another, which pushes the grocers to raise their quality and offerings to gain customers.

Other unredacted sections provide a better picture of the government’s case on how a merger would impact unionized stores. Federal regulators argued that Kroger and Albertsons have largely unionized workforces, enabling the unions to pit the competitors against one another to gain leverage during contract negotiations.

Another unredacted passage indicates that an Albertsons’ labor executive refers to Kroger “bargaining competitor” since the two companies “compete for sales and talent while engaging in bargaining with local unions at the same time.”

The Federal Trade Commission alleged that, in 2019, Kroger and Albertsons “successfully coordinated” in negotiations with Portland union workers that led to less favorable wages and working conditions for employees. It also allowed Kroger to “push through” a “reduction in healthcare reserve funding,” according to a newly unredacted passage.

The merger, federal regulators say, would serve to formalize those backchannel strategizing.

“The proposed acquisition is ‘a way out of it’ that would allow (Kroger and Albertsons) to have total alignment in future negotiations, to the detriment of union grocery workers,” federal regulators alleged.

United Food and Commercial Workers Local 555 — which represents the majority of workers at Albertsons, Safeway, Fred Meyer and QFC in Oregon and parts of Washington — endorsed the deal in January, saying that the deal would have a better outcome for workers than Albertsons’ sale to a different buyer.

But the union’s national umbrella and many other local chapters, as well as the Teamsters union that represents warehouse and transportation workers, have opposed the merger.

The newly unredacted complaint also shed more light on regulators’ concerns about Kroger and Albertsons’ divestiture plan. Last fall, the two companies promised to preserve competition under their merger deal by selling more than 400 stores to New Hampshire-based C&S for $1.9 billion. That sale would include at least 49 stores in Oregon.

The Federal Trade Commission argued that C&S lacks the experience in the food retail market and would “face multiple significant obstacles stitching together a viable business” that would make it a viable competitor.

Newly cleared sections suggest that C&S lacks experience running a grocery operation and that “even C&S admits, the proposed divestiture lacks the scale and necessary assets” that Kroger and Albertsons “rely on today to successfully operate their respective businesses.”

While the two supermarket giants and C&S have said that the merger won’t result in store closures, federal regulators alleged that “C&S admits that these commitments have no legally binding effect or duration, and C&S has reserved its right to close or sell supermarkets once the transition is completed.”

In newly uncensored sections, federal regulators cited internal company documents in which C&S contemplated selling the real estate it acquires in the deal, then leasing it back — recouping $1.5 billion of its purchase costs but potentially putting individual stores in a more vulnerable position, subject to the whims of a third-party landlord.

Lauren La Bruno, spokesperson for C&S Wholesale Grocers, said that the company “is deeply committed to our transformation strategy, which includes the expansion of our retail footprint.”

“C&S has 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,” La Bruno added. She also contends that the company has “a strong track record as a successful grocery retailer” that serves 7,500 independent supermarkets, retail chain stores and military bases.

But the Federal Trade Commission argues that C&S currently operates only 23 retail supermarkets — under the Piggly-Wiggly and Grand Union banners — and only one retail pharmacy. The rest of the stores are not operated by C&S, as the company acts as their supplier.

C&S acquired most of the stores it owns and operates in 2021 and 2022, regulators argued, making the company a “poor choice for a divestiture buyer” that would increase the likelihood that the divested stores would “flounder or fail.”

Kroger and Albertsons are two of Oregon’s biggest grocery chains, with more than 170 stores altogether under the Fred Meyer, QFC, Albertsons and Safeway brands. Kroger did not respond to inquiries on Tuesday, and Albertsons officials declined to comment on the lawsuit’s newly unredacted details.

More proof C&S isn't a real, committed buyer. Kroger and Albertsons lied about them. No real surprises there. Zero commitment to run the stores. Sell and lease back all the real estate then sell the stores to sucker operators (IGA type) for a dollar each, a service agreement contracting them to C&S for their wholesale needs, and watch them all fold quickly to clear the field for the new Kroger Goliath company.

C&S proven again has no intentions of being what the government wants when stores are divested, a committed party who wants to operate them to compete in the market. They are not a "agile new competitor" but rather a quick buck liquidator.

They are going to have to void the C&S deal if they want any chance of completing this merger. But if they do, then those stores they expected C&S will effectively liquidate for them could stand tall as real competitors which would reduce the increased sales and profits they would expect in their combined company. Between that and the vastly reduced store count I really don't see how it is "worth it" for Kroger to move forward with this deal.

[babs]

Interesting story: https://www.oregonlive.com/business/202 ... ungry.html

Fred Meyer, Albertsons internal documents show fierce competition in Portland before merger talks: ‘We must stay hungry’
Published: Apr. 10, 2024, 10:26 a.m.

By Kristine de Leon | The Oregonian/OregonLive
New filings in the Federal Trade Commission’s lawsuit to block Kroger’s $24.6 billion bid to buy its next largest rival, Albertsons Co., detail the fierce competition between the two companies in Portland.

Kroger is the parent company of Fred Meyer and QFC, while Albertsons owns Safeway. In Portland and other markets where the companies have significant overlap, a fight for market share between the two has helped keep grocery prices down and the quality of products and services up, federal regulators argued in a lawsuit filed on Feb. 21.

“We must stay hungry, sharp and on top of our business. Kroger is hurting and looking to gain share back. WE MUST NOT LET THEM,” Albertsons’s vice president of marketing and merchandising wrote in an internal email about Kroger’s promotional ads in Portland, according to newly unredacted passages in the suit filed in federal court in Portland.

Kroger executives, in turn, refer in internal communications to Albertsons and Safeway stores as their “#1 direct competitor” and “biggest competitors.”

The statements were previously censored over concerns that they contained confidential information that could competitively harm Kroger and Albertsons.

The Federal Trade Commission initially filed a heavily redacted version of its lawsuit to block what would be the largest supermarket merger in U.S. history, along with an unredacted copy that still remains under seal. On Tuesday, the federal court in Portland filed an amended version of the public version of the lawsuit that revealed dozens of previously redacted passages.

The newly unveiled statements contained in the lawsuit adds more texture to the Federal Trade Commission case against the proposed merger, which regulators say would hurt both customers and workers. They argue the deal would reduce competition in the grocery industry, resulting in higher food prices and lower wages for workers, and they lean on the companies’ own words to make the case.

Kroger and Albertsons have structured their deal to introduce a new competitor to the markets where they overlap by selling stores to a grocery supplier, C&S Wholesale Grocers. The much smaller company operates a handful of stores in the Northeast and licenses the Piggly Wiggly brand in the South and Midwest to store operators.

In another newly unsealed statement, a Kroger executive acknowledged after the deal was announced that “Albertsons has made a lot of improvements in many of their stores” in markets that would be impacted by the merger, which regulators say illustrate how the two companies pit themselves against one another, which pushes the grocers to raise their quality and offerings to gain customers.

Other unredacted sections provide a better picture of the government’s case on how a merger would impact unionized stores. Federal regulators argued that Kroger and Albertsons have largely unionized workforces, enabling the unions to pit the competitors against one another to gain leverage during contract negotiations.

Another unredacted passage indicates that an Albertsons’ labor executive refers to Kroger “bargaining competitor” since the two companies “compete for sales and talent while engaging in bargaining with local unions at the same time.”

The Federal Trade Commission alleged that, in 2019, Kroger and Albertsons “successfully coordinated” in negotiations with Portland union workers that led to less favorable wages and working conditions for employees. It also allowed Kroger to “push through” a “reduction in healthcare reserve funding,” according to a newly unredacted passage.

The merger, federal regulators say, would serve to formalize those backchannel strategizing.

“The proposed acquisition is ‘a way out of it’ that would allow (Kroger and Albertsons) to have total alignment in future negotiations, to the detriment of union grocery workers,” federal regulators alleged.

United Food and Commercial Workers Local 555 — which represents the majority of workers at Albertsons, Safeway, Fred Meyer and QFC in Oregon and parts of Washington — endorsed the deal in January, saying that the deal would have a better outcome for workers than Albertsons’ sale to a different buyer.

But the union’s national umbrella and many other local chapters, as well as the Teamsters union that represents warehouse and transportation workers, have opposed the merger.

The newly unredacted complaint also shed more light on regulators’ concerns about Kroger and Albertsons’ divestiture plan. Last fall, the two companies promised to preserve competition under their merger deal by selling more than 400 stores to New Hampshire-based C&S for $1.9 billion. That sale would include at least 49 stores in Oregon.

The Federal Trade Commission argued that C&S lacks the experience in the food retail market and would “face multiple significant obstacles stitching together a viable business” that would make it a viable competitor.

Newly cleared sections suggest that C&S lacks experience running a grocery operation and that “even C&S admits, the proposed divestiture lacks the scale and necessary assets” that Kroger and Albertsons “rely on today to successfully operate their respective businesses.”

While the two supermarket giants and C&S have said that the merger won’t result in store closures, federal regulators alleged that “C&S admits that these commitments have no legally binding effect or duration, and C&S has reserved its right to close or sell supermarkets once the transition is completed.”

In newly uncensored sections, federal regulators cited internal company documents in which C&S contemplated selling the real estate it acquires in the deal, then leasing it back — recouping $1.5 billion of its purchase costs but potentially putting individual stores in a more vulnerable position, subject to the whims of a third-party landlord.

Lauren La Bruno, spokesperson for C&S Wholesale Grocers, said that the company “is deeply committed to our transformation strategy, which includes the expansion of our retail footprint.”

“C&S has 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,” La Bruno added. She also contends that the company has “a strong track record as a successful grocery retailer” that serves 7,500 independent supermarkets, retail chain stores and military bases.

But the Federal Trade Commission argues that C&S currently operates only 23 retail supermarkets — under the Piggly-Wiggly and Grand Union banners — and only one retail pharmacy. The rest of the stores are not operated by C&S, as the company acts as their supplier.

C&S acquired most of the stores it owns and operates in 2021 and 2022, regulators argued, making the company a “poor choice for a divestiture buyer” that would increase the likelihood that the divested stores would “flounder or fail.”

Kroger and Albertsons are two of Oregon’s biggest grocery chains, with more than 170 stores altogether under the Fred Meyer, QFC, Albertsons and Safeway brands. Kroger did not respond to inquiries on Tuesday, and Albertsons officials declined to comment on the lawsuit’s newly unredacted details.

More proof C&S isn't a real, committed buyer. Kroger and Albertsons lied about them. No real surprises there. Zero commitment to run the stores. Sell and lease back all the real estate then sell the stores to sucker operators (IGA type) for a dollar each, a service agreement contracting them to C&S for their wholesale needs, and watch them all fold quickly to clear the field for the new Kroger Goliath company.

C&S proven again has no intentions of being what the government wants when stores are divested, a committed party who wants to operate them to compete in the market. They are not a "agile new competitor" but rather a quick buck liquidator.

They are going to have to void the C&S deal if they want any chance of completing this merger. But if they do, then those stores they expected C&S will effectively liquidate for them could stand tall as real competitors which would reduce the increased sales and profits they would expect in their combined company. Between that and the vastly reduced store count I really don't see how it is "worth it" for Kroger to move forward with this deal.

The fact that they bring up they think the real estate could be sold for $1.5 billion, covering most of the $1.9 billion purchase price shows their thinking. Just because you are the wholesaler to hundreds of stores and only run 23 stores yourself is pretty damning as well.

[ClownLoach]

Interesting story: https://www.oregonlive.com/business/202 ... ungry.html

Fred Meyer, Albertsons internal documents show fierce competition in Portland before merger talks: ‘We must stay hungry’
Published: Apr. 10, 2024, 10:26 a.m.

By Kristine de Leon | The Oregonian/OregonLive
New filings in the Federal Trade Commission’s lawsuit to block Kroger’s $24.6 billion bid to buy its next largest rival, Albertsons Co., detail the fierce competition between the two companies in Portland.

Kroger is the parent company of Fred Meyer and QFC, while Albertsons owns Safeway. In Portland and other markets where the companies have significant overlap, a fight for market share between the two has helped keep grocery prices down and the quality of products and services up, federal regulators argued in a lawsuit filed on Feb. 21.

“We must stay hungry, sharp and on top of our business. Kroger is hurting and looking to gain share back. WE MUST NOT LET THEM,” Albertsons’s vice president of marketing and merchandising wrote in an internal email about Kroger’s promotional ads in Portland, according to newly unredacted passages in the suit filed in federal court in Portland.

Kroger executives, in turn, refer in internal communications to Albertsons and Safeway stores as their “#1 direct competitor” and “biggest competitors.”

The statements were previously censored over concerns that they contained confidential information that could competitively harm Kroger and Albertsons.

The Federal Trade Commission initially filed a heavily redacted version of its lawsuit to block what would be the largest supermarket merger in U.S. history, along with an unredacted copy that still remains under seal. On Tuesday, the federal court in Portland filed an amended version of the public version of the lawsuit that revealed dozens of previously redacted passages.

The newly unveiled statements contained in the lawsuit adds more texture to the Federal Trade Commission case against the proposed merger, which regulators say would hurt both customers and workers. They argue the deal would reduce competition in the grocery industry, resulting in higher food prices and lower wages for workers, and they lean on the companies’ own words to make the case.

Kroger and Albertsons have structured their deal to introduce a new competitor to the markets where they overlap by selling stores to a grocery supplier, C&S Wholesale Grocers. The much smaller company operates a handful of stores in the Northeast and licenses the Piggly Wiggly brand in the South and Midwest to store operators.

In another newly unsealed statement, a Kroger executive acknowledged after the deal was announced that “Albertsons has made a lot of improvements in many of their stores” in markets that would be impacted by the merger, which regulators say illustrate how the two companies pit themselves against one another, which pushes the grocers to raise their quality and offerings to gain customers.

Other unredacted sections provide a better picture of the government’s case on how a merger would impact unionized stores. Federal regulators argued that Kroger and Albertsons have largely unionized workforces, enabling the unions to pit the competitors against one another to gain leverage during contract negotiations.

Another unredacted passage indicates that an Albertsons’ labor executive refers to Kroger “bargaining competitor” since the two companies “compete for sales and talent while engaging in bargaining with local unions at the same time.”

The Federal Trade Commission alleged that, in 2019, Kroger and Albertsons “successfully coordinated” in negotiations with Portland union workers that led to less favorable wages and working conditions for employees. It also allowed Kroger to “push through” a “reduction in healthcare reserve funding,” according to a newly unredacted passage.

The merger, federal regulators say, would serve to formalize those backchannel strategizing.

“The proposed acquisition is ‘a way out of it’ that would allow (Kroger and Albertsons) to have total alignment in future negotiations, to the detriment of union grocery workers,” federal regulators alleged.

United Food and Commercial Workers Local 555 — which represents the majority of workers at Albertsons, Safeway, Fred Meyer and QFC in Oregon and parts of Washington — endorsed the deal in January, saying that the deal would have a better outcome for workers than Albertsons’ sale to a different buyer.

But the union’s national umbrella and many other local chapters, as well as the Teamsters union that represents warehouse and transportation workers, have opposed the merger.

The newly unredacted complaint also shed more light on regulators’ concerns about Kroger and Albertsons’ divestiture plan. Last fall, the two companies promised to preserve competition under their merger deal by selling more than 400 stores to New Hampshire-based C&S for $1.9 billion. That sale would include at least 49 stores in Oregon.

The Federal Trade Commission argued that C&S lacks the experience in the food retail market and would “face multiple significant obstacles stitching together a viable business” that would make it a viable competitor.

Newly cleared sections suggest that C&S lacks experience running a grocery operation and that “even C&S admits, the proposed divestiture lacks the scale and necessary assets” that Kroger and Albertsons “rely on today to successfully operate their respective businesses.”

While the two supermarket giants and C&S have said that the merger won’t result in store closures, federal regulators alleged that “C&S admits that these commitments have no legally binding effect or duration, and C&S has reserved its right to close or sell supermarkets once the transition is completed.”

In newly uncensored sections, federal regulators cited internal company documents in which C&S contemplated selling the real estate it acquires in the deal, then leasing it back — recouping $1.5 billion of its purchase costs but potentially putting individual stores in a more vulnerable position, subject to the whims of a third-party landlord.

Lauren La Bruno, spokesperson for C&S Wholesale Grocers, said that the company “is deeply committed to our transformation strategy, which includes the expansion of our retail footprint.”

“C&S has 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,” La Bruno added. She also contends that the company has “a strong track record as a successful grocery retailer” that serves 7,500 independent supermarkets, retail chain stores and military bases.

But the Federal Trade Commission argues that C&S currently operates only 23 retail supermarkets — under the Piggly-Wiggly and Grand Union banners — and only one retail pharmacy. The rest of the stores are not operated by C&S, as the company acts as their supplier.

C&S acquired most of the stores it owns and operates in 2021 and 2022, regulators argued, making the company a “poor choice for a divestiture buyer” that would increase the likelihood that the divested stores would “flounder or fail.”

Kroger and Albertsons are two of Oregon’s biggest grocery chains, with more than 170 stores altogether under the Fred Meyer, QFC, Albertsons and Safeway brands. Kroger did not respond to inquiries on Tuesday, and Albertsons officials declined to comment on the lawsuit’s newly unredacted details.

More proof C&S isn't a real, committed buyer. Kroger and Albertsons lied about them. No real surprises there. Zero commitment to run the stores. Sell and lease back all the real estate then sell the stores to sucker operators (IGA type) for a dollar each, a service agreement contracting them to C&S for their wholesale needs, and watch them all fold quickly to clear the field for the new Kroger Goliath company.

C&S proven again has no intentions of being what the government wants when stores are divested, a committed party who wants to operate them to compete in the market. They are not a "agile new competitor" but rather a quick buck liquidator.

They are going to have to void the C&S deal if they want any chance of completing this merger. But if they do, then those stores they expected C&S will effectively liquidate for them could stand tall as real competitors which would reduce the increased sales and profits they would expect in their combined company. Between that and the vastly reduced store count I really don't see how it is "worth it" for Kroger to move forward with this deal.

The fact that they bring up they think the real estate could be sold for $1.5 billion, covering most of the $1.9 billion purchase price shows their thinking. Just because you are the wholesaler to hundreds of stores and only run 23 stores yourself is pretty damning as well.

So Kroger pays about $12 million per store, while C&S is paying $4.2 million per store.

If the C&S price per store is fixed which I assume it is and they hit the max of 650 then Kroger will now be paying almost $14 million per store. In urban California you probably couldn't build a store for $14M, but in cheaper markets with more basic construction (no seismic, basically block walls concrete floor etc) I'm guessing Kroger could build a new 50K store for the same price they're paying for old Albertsons properties.

So it's a really bad deal for Kroger if any of the sales in the C&S stores "stick" with them. They need each and every C&S store to close and it's sales return to a Kroger store for this to pan out. That means if they sold to any real competition who would keep them open (like Stater in SoCal, or Raley's/Save Mart in Norcal, AZ, NV, whoever in the PNW) and retain their business and effectively Kroger has paid $14M per store to just get whatever meager earnings that store generates which would most likely mean the added profit annually wouldn't offset the purchase cost with interest applied over time. They need the C&S locations to close and all their sales transfer over to a kept Kroger or Albertsons so that they can leverage the fixed overhead costs and increase their profits.

Based on the average cost value of inventory on the ACI balance sheet, each Albertsons store has about $2.2M of inventory. So C&S is only paying $2M per store if all those goods are liquidated at a profit.

They're paying $1.9B for $1.5B of Real Estate and $900M of inventory, and that doesn't include the other assets they'll receive like FF&E, Warehouses, Manufacturing Plants and so on.

If we just look at the basics of Real Estate and Store Inventory they're putting in $1.9B and getting $2.4B back, an immediate $500M windfall if they only liquidate the inventory at cost and don't spend much labor doing it.

Or a $500M profit after disposing of and closing every single store, and that's before whatever they make off selling leases, FF&E, plants etc. Probably another billion or two, which would mean paying $1.9B to recover the entire investment and double their money. They can flip the leased real estate into a bogus LLP or something that was designed to go bankrupt immediately so that not only is C&S unharmed but they cancel the leases for free and maximize their profits.

No wonder C&S won't commit to becoming the viable competitor Kroger claims they are... It's way too profitable to close all the stores they're buying! They're going to close every damn store they buy, with the only exception being anything they can sell to independent operators. And that's exactly what Kroger and Albertsons want them to do. They committed they won't close any stores themselves because they've effectively hired C&S to do it for them.

Total validation from just skimming through the balance sheet. The C&S deal was engineered to be worse than Haggen 2.0. Now I'm further convinced that if the Feds and States force the C&S deal to be canceled and order these stores to be sold to the highest bidder that will be the end of the merger. They'll call it off... They have to. They do not want what they promised, they absolutely do not want every store to stay open.

Right now I see zero difference, based on the Financials and the lack of commitment to stay open by C&S, between selling these stores to them or a liquidator like Hilco or Gordon Brothers or Great American. Of course if they said they were selling the divest stores to Hilco there would be Attorneys General screaming from the rooftops of state capitals everywhere, so instead they found a company that nobody's ever heard of (C&S) that performs all the same exact services. What a joke.