Kroger to sell 63 California supermarkets as part of merger with Albertsons

Supermarket giant Kroger Co. has announced plans to divest more than 60 supermarkets in California as part of its planned merger with Albertsons.

The 63 supermarkets — mostly in Southern California — are among hundreds of stores, distribution centers and manufacturing plants on a list the companies released Tuesday indicating those they plan to sell to C&S Wholesale Grocers. The sale, however, would only occur if federal regulators approve Kroger’s bid to buy its smaller rival Albertsons.

The supermarket chains proposed selling off some stores and other assets to ease regulators’ concerns about the megamerger, bringing the number of stores to 579 from 413 in April after the Federal Trade Commission blocked the deal this year.

The sale of hundreds of stores and facilities was valued at $2.9 billion in April.

The 63 California stores listed include 15 Albertsons locations, including two in Huntington Beach; 31 Vons locations, including the Fairfax Avenue store in Los Angeles and the West 3rd Street location; 16 Pavilions locations and one Safeway location in the Bay Area.

The companies have begun notifying employees at the affected locations, CEO Rodney McMullen wrote in a memo to employees on Tuesday, Bloomberg reported.

Workers will become employees of C&S Wholesale Grocers after the transaction closes, McMullen wrote. C&S has agreed to transfer salary and health care plans and assume all collective bargaining agreements, he added.

In February, the FTC announced it would file a lawsuit to block the merger, arguing that the combination of the two companies would destroy competition, leading to higher prices and lower-quality products for millions of Americans.

The supermarkets, which announced their $25 billion merger in October 2022, are making the list public in preparation for a trial expected in August that will determine what happens to their deal.

A coalition of local union members of the United Food and Commercial Workers in California is opposing the merger, organizing protests and meetings with representatives of supermarket companies and with state, federal and regional regulators.

“We remain focused on stopping this proposed mega-merger for the same reasons we have stated since it was first announced more than 20 months ago — because we know it would hurt workers, it would hurt shoppers, it would hurt suppliers and communities, and it is illegal,” five UFCW locals said in a statement Tuesday.

Kroger and Albertsons say they need the merger to compete with larger, non-union rivals, Walmart and Costco. The companies have pledged to invest $500 million to cut prices and $1 billion to raise worker wages and benefits, plus $1.3 billion to improve Albertsons stores.

Kathy Finn, a longtime leader with United Food and Commercial Workers Local 770 in Southern California, said this year that the proposed merger “would give California as much or more of an impact than any other state.”

UFCW Local 770 represents nearly 30,000 members in Los Angeles, Santa Barbara, Ventura, San Luis Obispo and Kern counties in the grocery, cannabis, drugstore, health care and packaging industries.

Other stores up for sale include 124 supermarkets in Washington state, 101 in Arizona and 91 in Colorado.

Bloomberg contributed to this report.

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