I think the idea is to get CO and AZ off their backs by saying look we are basically divesting 80%+ of Albertsons/Safeway in your states - what more do you AGs want us to do? We are basically not "merging" in your state. And yes, that is true, the problem is the Albertsons/Safeway Stores end up in the hands of an operator that has a lot of questions as to if they can survive or not.
Let's take this a step further. If they announced the buyer for CO and/or AZ was going to be Raleys, Save Mart, Ahold, Stater, AWG, or some other established party- how would people's opinions change on this merger?
I actually think selling more stores to C&S makes things even worse... it will make the failure of C&S operated stores, if they fail in the manner Haggen did, even more devastating to more employees/neighborhoods.
I think in Arizona if they named Raley's as the buyer instead of C&S there would still be pushback because of their ownership of Bashas.
The fact is that Arizona, especially Phoenix, was one of the most over-stored markets in America for several decades. Now they're having to deal with the deteriorating dead malls and white space all over the place. They know that the store count of Kroger and Albertsons is too high, and realistically they could clean up the Frys division and probably close 80% of the Albertsons owned stores, absorbing their business almost entirely. The only thing that keeps all these stores open is intense competition to battle for the customer otherwise they would have done mass culling of stores as they did in SoCal over the last 15 years.
So the state is trying desperately to prolong the inevitable, which is a mass purge of grocery stores that wipes a hundred or so stores off the map in the greater Phoenix metroplex. They know what this will do for property taxes and employment. C&S is almost a guarantee that purge of stores would happen as they inevitably crash and burn taking down this hundred stores with them. But I don't see them being open to letting this merger happen in any fashion, and I also think that they will be proven to be making a big mistake in trying to get C&S to operate more stores. I do have to assume that they chose to license the Safeway name because they must intend to rebrand all the kept locations as Frys... That would eliminate the Albertsons name from all Kroger owned operations in California and Arizona presuming the merger went through. There is no reason to rebrand kept Safeway stores as Albertsons when they're going to have to be taking down Albertsons signs just over the state line in California, and that also makes me wonder if they are going to make the mistake of rebranding all kept Albertsons as Ralphs in SoCal. Clearly the banner strategy has changed based on the shifting store counts.
I'm not sure Arizona / Phoenix is as overstored anymore.
Fleming / ABCO went under in 2001 and only a couple dozen former Fleming / ABCO stores are still supermarkets. The vast majority (30+ are either vacant or other uses).
Since 2006 Albertsons has closed 1/2 of its stores (I believe it's peak was 60/61 stores and now it is at 30).
Since 2008 Bashas' has closed at least 30 stores between the Bashas, Food City and AJ's banners).
Safeway and Fry's have also closed about a dozen stores each since the mid 2000s (although Fry's has probably opened almost as many as it has closed and Safeway opened about 4 - 5).
It's pretty much at the point that in most places in Arizona Fry's and Albertsons or Safeway are the only traditional supermarkets left. Bashas' is a shell of itself that has really poor geographic distribution and their stores probably do 1/2 the volume of an Albertsons or Safeway unit.
It is still overstored in my view. There are a number of Safeway units that are not doing much volume. Medium volume operations that are one competitive opening (like a Sprouts or Trader Joe's or even Aldi if they get good reception) away from closure. The Bashas units around Phoenix are so slow of customers I have no idea how they stay open. I also think some of the older Frys units run far below average volumes for Kroger but it is still enough volume to survive and if they were to shift to say a Bashas or Food City and retain most of the customers they'd be fantastic performing stores for those two chains, and if they were to shift to a Safeway they'd be an okay performer relative to the typical Safeway over there.
Also how many of the Safeway units can afford a 20% sales loss because I expect that is what will occur when C&S takes them over... that seems to be the usual sales decline when ownership changes on a chain supermarket based on what I heard with these activities from Haggen, Save Mart, NorCal Ralphs, etc. I am not sure what the answer to that is but my guess is a significant number of locations cannot afford that type of a sales loss.
My guess is the Bashas around Phoenix do 1/4 the volume of a typical Frys and 1/3 the volume of a typical Safeway. It is that bad. I'm also not sure how much better the Food City units actually do. Basket sizes in those seem quite small and focused on low cost produce/meat, and prepared food; center store sales in Food City look very slow, but they're also far smaller stores/lower cost to run. Raleys really needs to get in there and do something with those stores to get more activity in the center store. Pricing isn't bad... mix is weird... private label program is a mess... needs a lot of work.
brendenmoney wrote: ↑April 22nd, 2024, 10:44 pm
It's hard for me to see how Albertsons and Kroger thought this new deal would entice the FTC any better. I know someone said maybe it was simply to get the states that were suing off their backs, but the FTC was very clear that C&S is simply a questionable buyer, and it's going to take actual legit regional supermarket operators as the divest buyers to even remotely sway the FTC into considering the deal.
I think this change was made in an attempt to sway public opinion. Most people don't understand the details, all they see is that the number of divested stores went from 413 to 579. That looks like a big increase, so people will think that Kroger is being reasonable and addressing the government's concerns about competition.
Public Opinion*
*The opinion of people in the states fighting hardest and demanding the Feds to put the deal in the freezer.
I expect there will also be some aggressive pricing activities with lots of publicity by Kroger in these states. I expect they'll be careful to include their dorky fruit cart and Kroger name in the advertising, indicating that KROGER FAMILY OF STORES LOWERS PRICES and KROGER SAVES YOU MONEY even though they will just raise the prices in states that don't care to offset. They are going to want to put on a show to the voters in those states to indicate that you want Kroger to take over as many stores as possible there because they lower prices, they save you money and so forth. They will also shine it on bright there about the quality of Piggly WigglySafeway under C&S' brilliant industry leading operations and how great it will be to bring this valiant competitor to the market.
In Arizona, this is a complete joke because as stated by @storewanderer they could easily absorb all the business of every ACI owned store within the Frys chain (as long as they clean up inconsistent operations there). This expanded divestiture deal is actually beneficial to Kroger as it means less overhead and more profits once all those stores go to C&S where they will wither and die immediately. Very cynical practices by Kroger here as they basically are turning the public sentiment against them by configuring a better more profitable deal for themselves since it can be assumed every divest will eventually close.
brendenmoney wrote: ↑April 22nd, 2024, 10:44 pm
It's hard for me to see how Albertsons and Kroger thought this new deal would entice the FTC any better. I know someone said maybe it was simply to get the states that were suing off their backs, but the FTC was very clear that C&S is simply a questionable buyer, and it's going to take actual legit regional supermarket operators as the divest buyers to even remotely sway the FTC into considering the deal.
I think this change was made in an attempt to sway public opinion. Most people don't understand the details, all they see is that the number of divested stores went from 413 to 579. That looks like a big increase, so people will think that Kroger is being reasonable and addressing the government's concerns about competition.
Public Opinion*
*The opinion of people in the states fighting hardest and demanding the Feds to put the deal in the freezer.
I expect there will also be some aggressive pricing activities with lots of publicity by Kroger in these states. I expect they'll be careful to include their dorky fruit cart and Kroger name in the advertising, indicating that KROGER FAMILY OF STORES LOWERS PRICES and KROGER SAVES YOU MONEY even though they will just raise the prices in states that don't care to offset. They are going to want to put on a show to the voters in those states to indicate that you want Kroger to take over as many stores as possible there because they lower prices, they save you money and so forth. They will also shine it on bright there about the quality of Piggly WigglySafeway under C&S' brilliant industry leading operations and how great it will be to bring this valiant competitor to the market.
In Arizona, this is a complete joke because as stated by @storewanderer they could easily absorb all the business of every ACI owned store within the Frys chain (as long as they clean up inconsistent operations there). This expanded divestiture deal is actually beneficial to Kroger as it means less overhead and more profits once all those stores go to C&S where they will wither and die immediately. Very cynical practices by Kroger here as they basically are turning the public sentiment against them by configuring a better more profitable deal for themselves since it can be assumed every divest will eventually close.
Kroger already enjoys a very positive reputation in Colorado and a pretty positive reputation in Arizona too. I don't think they need to do much feel good PR. Customers in those states already seem to think Kroger offers better pricing than Safeway/Albertsons.
I'm not sure how much the general public really cares about this. They should care but the general public doesn't seem to care about much until it actually happens and it is too late to un-do/fix.
I'll be very curious to see a list of what they actually keep in Colorado. By my measurement when I go down and look at some rural markets like Lamar, La Junta, or Walsenburg (all home of 90s, late 80s, early 80s interior Safeways and no Kroger for many miles) and then trace through some of the other small towns throughout the state as well as portions of Colorado Springs and even a couple instances around Denver suburbs, I come to closer to 25 or so Safeways that do not overlap with a Kroger operation there. But they are not retaining 25 stores. So I wonder what rural stores hundreds of miles from any Kroger also go.
I think this change was made in an attempt to sway public opinion. Most people don't understand the details, all they see is that the number of divested stores went from 413 to 579. That looks like a big increase, so people will think that Kroger is being reasonable and addressing the government's concerns about competition.
Public Opinion*
*The opinion of people in the states fighting hardest and demanding the Feds to put the deal in the freezer.
I expect there will also be some aggressive pricing activities with lots of publicity by Kroger in these states. I expect they'll be careful to include their dorky fruit cart and Kroger name in the advertising, indicating that KROGER FAMILY OF STORES LOWERS PRICES and KROGER SAVES YOU MONEY even though they will just raise the prices in states that don't care to offset. They are going to want to put on a show to the voters in those states to indicate that you want Kroger to take over as many stores as possible there because they lower prices, they save you money and so forth. They will also shine it on bright there about the quality of Piggly WigglySafeway under C&S' brilliant industry leading operations and how great it will be to bring this valiant competitor to the market.
In Arizona, this is a complete joke because as stated by @storewanderer they could easily absorb all the business of every ACI owned store within the Frys chain (as long as they clean up inconsistent operations there). This expanded divestiture deal is actually beneficial to Kroger as it means less overhead and more profits once all those stores go to C&S where they will wither and die immediately. Very cynical practices by Kroger here as they basically are turning the public sentiment against them by configuring a better more profitable deal for themselves since it can be assumed every divest will eventually close.
Kroger already enjoys a very positive reputation in Colorado and a pretty positive reputation in Arizona too. I don't think they need to do much feel good PR. Customers in those states already seem to think Kroger offers better pricing than Safeway/Albertsons.
I'm not sure how much the general public really cares about this. They should care but the general public doesn't seem to care about much until it actually happens and it is too late to un-do/fix.
I'll be very curious to see a list of what they actually keep in Colorado. By my measurement when I go down and look at some rural markets like Lamar, La Junta, or Walsenburg (all home of 90s, late 80s, early 80s interior Safeways and no Kroger for many miles) and then trace through some of the other small towns throughout the state as well as portions of Colorado Springs and even a couple instances around Denver suburbs, I come to closer to 25 or so Safeways that do not overlap with a Kroger operation there. But they are not retaining 25 stores. So I wonder what rural stores hundreds of miles from any Kroger also go.
The reason I say that they're obviously campaigning in those states is that their legislators are against the deal, so they're going to trump up the reputation of lower prices with the public in an effort to gain their approval. Then they'll lobby by claiming things like "Recent surveys show 99% of Arizona residents want Kroger merger approved now to lower their grocery bills" and start shoving it in the face of the AGs and such hoping they'll back down. It all makes sense in hindsight, they made a divest list of what ever they knew they would close in a merger and/or what they couldn't get away with keeping, then left a gap of about 200 more possible divestitures hoping that more states would be apathetic than active in fighting it. Colorado, Washington and Arizona decided to be the three that pushed back the most, so now they're divesting more there only and making noise about it to their investors. But obviously they're going to have to make a political campaign of it too as they want the Feds to back off. Since the Feds and FTC generally put as much or as little pressure as the State AGs want on merging companies, if they can get the Arizona, Washington and Colorado triad off their backs then they probably won't have to divest anything else and possibly get away with merging while effectively self divesting 7-Eleven style except in those three states.
That is going to leave the only remaining issue the selection of C&S and if the feds determine it to actually be a viable option or not. But if the only question is the buyer then I still think they could unwind the C&S deal and sell off chunks to better equipped buyers including the necessary facilities, brands, banners, whatever. It's obviously easier for them to use C&S since they position themselves as a facilitator of deals, much like Great American, Hilco and others.
I think this change was made in an attempt to sway public opinion. Most people don't understand the details, all they see is that the number of divested stores went from 413 to 579. That looks like a big increase, so people will think that Kroger is being reasonable and addressing the government's concerns about competition.
Public Opinion*
*The opinion of people in the states fighting hardest and demanding the Feds to put the deal in the freezer.
I expect there will also be some aggressive pricing activities with lots of publicity by Kroger in these states. I expect they'll be careful to include their dorky fruit cart and Kroger name in the advertising, indicating that KROGER FAMILY OF STORES LOWERS PRICES and KROGER SAVES YOU MONEY even though they will just raise the prices in states that don't care to offset. They are going to want to put on a show to the voters in those states to indicate that you want Kroger to take over as many stores as possible there because they lower prices, they save you money and so forth. They will also shine it on bright there about the quality of Piggly WigglySafeway under C&S' brilliant industry leading operations and how great it will be to bring this valiant competitor to the market.
In Arizona, this is a complete joke because as stated by @storewanderer they could easily absorb all the business of every ACI owned store within the Frys chain (as long as they clean up inconsistent operations there). This expanded divestiture deal is actually beneficial to Kroger as it means less overhead and more profits once all those stores go to C&S where they will wither and die immediately. Very cynical practices by Kroger here as they basically are turning the public sentiment against them by configuring a better more profitable deal for themselves since it can be assumed every divest will eventually close.
Kroger already enjoys a very positive reputation in Colorado and a pretty positive reputation in Arizona too. I don't think they need to do much feel good PR. Customers in those states already seem to think Kroger offers better pricing than Safeway/Albertsons.
I'm not sure how much the general public really cares about this. They should care but the general public doesn't seem to care about much until it actually happens and it is too late to un-do/fix.
I'll be very curious to see a list of what they actually keep in Colorado. By my measurement when I go down and look at some rural markets like Lamar, La Junta, or Walsenburg (all home of 90s, late 80s, early 80s interior Safeways and no Kroger for many miles) and then trace through some of the other small towns throughout the state as well as portions of Colorado Springs and even a couple instances around Denver suburbs, I come to closer to 25 or so Safeways that do not overlap with a Kroger operation there. But they are not retaining 25 stores. So I wonder what rural stores hundreds of miles from any Kroger also go.
Fry’s and S/A overall prices are about the same-if you check their weekly ads. Both depend too much on digital rewards. The same item Fry’s has on sale this week will be on sale at Safeway the following week.
*The opinion of people in the states fighting hardest and demanding the Feds to put the deal in the freezer.
I expect there will also be some aggressive pricing activities with lots of publicity by Kroger in these states. I expect they'll be careful to include their dorky fruit cart and Kroger name in the advertising, indicating that KROGER FAMILY OF STORES LOWERS PRICES and KROGER SAVES YOU MONEY even though they will just raise the prices in states that don't care to offset. They are going to want to put on a show to the voters in those states to indicate that you want Kroger to take over as many stores as possible there because they lower prices, they save you money and so forth. They will also shine it on bright there about the quality of Piggly WigglySafeway under C&S' brilliant industry leading operations and how great it will be to bring this valiant competitor to the market.
In Arizona, this is a complete joke because as stated by @storewanderer they could easily absorb all the business of every ACI owned store within the Frys chain (as long as they clean up inconsistent operations there). This expanded divestiture deal is actually beneficial to Kroger as it means less overhead and more profits once all those stores go to C&S where they will wither and die immediately. Very cynical practices by Kroger here as they basically are turning the public sentiment against them by configuring a better more profitable deal for themselves since it can be assumed every divest will eventually close.
Kroger already enjoys a very positive reputation in Colorado and a pretty positive reputation in Arizona too. I don't think they need to do much feel good PR. Customers in those states already seem to think Kroger offers better pricing than Safeway/Albertsons.
I'm not sure how much the general public really cares about this. They should care but the general public doesn't seem to care about much until it actually happens and it is too late to un-do/fix.
I'll be very curious to see a list of what they actually keep in Colorado. By my measurement when I go down and look at some rural markets like Lamar, La Junta, or Walsenburg (all home of 90s, late 80s, early 80s interior Safeways and no Kroger for many miles) and then trace through some of the other small towns throughout the state as well as portions of Colorado Springs and even a couple instances around Denver suburbs, I come to closer to 25 or so Safeways that do not overlap with a Kroger operation there. But they are not retaining 25 stores. So I wonder what rural stores hundreds of miles from any Kroger also go.
Fry’s and S/A overall prices are about the same-if you check their weekly ads. Both depend too much on digital rewards. The same item Fry’s has on sale this week will be on sale at Safeway the following week.
So what. They are going to put on a show in those three states. Watch them do Grand Opening type prices and such. They are going to make sure it is known by all that they can somehow wave their magic wand and lower prices but they can't afford to keep doing it unless the residents all petition their legislators to stop opposing the merger. It's going to be a dog and pony show. They're going to do surveys, focus groups, and basically say that their merger is the cure for inflation, inflammation and cancer.
The trial with the Washington AG has been OK'd by the courts and is now set by September. If Kroger was hoping to get this wrapped up by election day that's looking less and less likely.
pseudo3d wrote: ↑April 29th, 2024, 11:02 am
The trial with the Washington AG has been OK'd by the courts and is now set by September. If Kroger was hoping to get this wrapped up by election day that's looking less and less likely.
Keep in mind the termination date can be dragged out to October 9. I’d think after that, the merger will almost certainly be stopped.
I doubt Trump would approve this merger assuming such a scenario were to happen, considering his friendship with the Gristedes owner in NYC.
pseudo3d wrote: ↑April 29th, 2024, 11:02 am
The trial with the Washington AG has been OK'd by the courts and is now set by September. If Kroger was hoping to get this wrapped up by election day that's looking less and less likely.
Keep in mind the termination date can be dragged out to October 9. I’d think after that, the merger will almost certainly be stopped.
I doubt Trump would approve this merger assuming such a scenario were to happen, considering his friendship with the Gristedes owner in NYC.
I haven't kept up with which trials are going to happen where. Which state is most likely to score a first injunction? Or is the federal government likely to score an injunction? I was reading somewhere that only a tiny handful of merger attempts facing antitrust litigation survive the first injunction. The vast majority are called off at that point. Once there is an injunction that typically requires all of the merger work to stop, any limited information sharing between the companies must stop, the integration teams that work under an NDA are forbidden from meeting, I believe that each party is required from that point out to have separate counsel, and so forth. Once the merger wheels stop turning within these companies it will be impossible to start them up again. For Cerberus and Apollo it would be best for them to walk away at that point and find other means to extract value, sell their stakes, split up the company, whatever they plan to do to get their money and leave.
I think the revised divestiture plan looks so much worse than the original that it screams out "we are grasping at straws" while it also puts them in the precarious position of filling out the majority of their divest budget (650 store max) which means if another big state like California called and demanded more concessions they would be in real trouble. At this point California could just call for the heck of it and say "we want you to divest another 100 stores" and that would put them over the cap. Based on the amount being paid by Kroger versus the amount the transaction is discounted for divestitures, it would no longer really be feasible for them to sell more stores than 650. At that point they would have to renegotiate the entire deal from scratch anyway and Kroger would have to significantly slash the price they are paying for it to make any sense financially to move forward.
Last edited by ClownLoach on April 29th, 2024, 2:52 pm, edited 1 time in total.
pseudo3d wrote: ↑April 29th, 2024, 11:02 am
The trial with the Washington AG has been OK'd by the courts and is now set by September. If Kroger was hoping to get this wrapped up by election day that's looking less and less likely.
Keep in mind the termination date can be dragged out to October 9. I’d think after that, the merger will almost certainly be stopped.
I doubt Trump would approve this merger assuming such a scenario were to happen, considering his friendship with the Gristedes owner in NYC.
I haven't kept up with which trials are going to happen where. Which state is most likely to score a first injunction? Or is the federal government likely to score an injunction? I was reading somewhere that only a tiny handful of merger attempts survive the first injunction. The vast majority are called off at that point. Once there is an injunction that typically requires all of the merger work to stop, the integration teams that work under an NDA are forbidden from meeting, I believe that each party is required from that point out to have separate counsel, and so forth. Once the merger wheels stop turning within these companies it will be impossible to start them up again.
The Fed trial (in Portland) is set for August 26, could go on for at least two weeks. There is a separate WA state trial that will begin on September 16, about six weeks before Election Day.
