This looks like a replay of the Albertsons/Safeway merger, with way more stores being sold off to a company unaccustomed to the sort of volume that would make the deal work:
C&S Wholesale Grocers, a supplier to independent grocery stores and owner of a retail pharmacy and 23 supermarkets under the Piggly Wiggly and Grand Union banners, has agreed to acquire a total of 579 stores in a revised divestiture deal worth $2.9 billion.
So the new C&S would be 25 times its current store footprint. Wholesale experience could mitigate that to some extent, but just ask Haggen how suddenly growing by an order of magnitude worked out. The story covers the Washington-state chain completely devoid of context:
In addition, Kroger will sell its Haggen banner to C&S, and C&S will license the Albertsons banner in California and Wyoming and the Safeway banner in Arizona and Colorado.
Again, this is a repeat of what the last merger did in Oregon and Washington, except this time it ropes four additional states into the problem. And, if history is any sort of barometer, there will be systemic failures on the part of C&S that result in the merged behemoth buying back the divested stores for a pittance, creating the same problems they’re claiming the new plan will solve.
With an additional hitch: As a wholesale distributor to 7,500 competing independent grocery stores, there’s no reason to believe that relationship will survive as a new direct competitor.
Edited because I did some research and had a major error. C&S does operate retail locations well west of the Mississippi.
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Kroger and Albertsons will sell an additional 166 stores, the supermarket giants announced Monday in an effort to appease federal antitrust regulators trying to block their merger.
The announcement comes two months after the Federal Trade Commission, along with eight states and the District of Columbia, filed a suit to block the merger, claiming it would eliminate competition, threaten consumers’ access to affordable groceries and undermine labor unions.
While Kroger and Albertsons claim that a merger is the only way to compete with retail giants Amazon and Walmart, state and federal regulators are raising concerns that it would have a ripple effect felt by customers, employees and suppliers across the country.
Critics have been also pointed to C&S’s lack of experience handling a large fleet of stores and concerns over its limited private-label selection — which it increasingly needs to extract higher margins while drawing in cost-cutting consumers.
As part of the revised deal, Kroger and Albertsons agreed to provide C&S with more “corporate and office infrastructure” to better handle the transition and added more distribution capacity and facilities.
The merged company would also likely shut down stores to avoid duplication in certain communities, a move that would push workers out of jobs, undermine labor unions, remove price competition for local suppliers and in some cases limit vulnerable communities’ access to fresh produce, said Christine Bartholomew, a professor of law and vice dean of academic affairs at the University at Buffalo School of Law.
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