A KROGER STORE IN TOLEDO, OHIO. PHOTO: BRITTANY GREESON FOR THE WALL STREET JOURNAL
KROGER, ALBERTSONS AGREE TO PAUSE MERGER AS FTC, STATE CHALLENGES PROCEED
BY: DAVE MICHAELS & PATRICK THOMASORIGINAL SITE: WSJ
Deal between the two grocery-store operators has faced regulatory scrutiny since it was announced in October 2022.
Kroger KR 0.26% increase; green up pointing triangle and Albertsons ACI -0.49% decrease; red down pointing triangle agreed to temporarily put their $20 billion deal on hold while antitrust enforcers pursue lawsuits to block it.
The companies agreed to the temporary injunction in a state lawsuit filed by Colorado Attorney General Phil Weiser. The state sued to block the merger in February, saying the transaction would reduce competition and harm consumers, workers and suppliers.
The Federal Trade Commission has separately filed a lawsuit in federal court in Oregon opposing the merger. The FTC says the combination would raise food prices and hurt workers’ bargaining power for pay raises.
A federal court will hear the FTC’s request for an injunction on Aug. 26. The judge in that case could issue an order imperiling the deal before the conclusion of the state trial in Colorado, which begins on Sept. 30.
A Kroger spokeswoman said Thursday that the decision eliminates the need for an August hearing in the Colorado case.
The merger between Kroger and Albertsons, initially announced in October 2022, would combine the two largest supermarket operators by store count in the U.S. The grocers have argued the deal puts them on better footing to compete with retail powerhouses Amazon and Walmart, which have pushed further into the grocery business, and strengthens unionized supermarkets.
In April, Kroger and Albertsons agreed to sell more than 160 additional stores as part of a divestiture package aimed at appeasing competition regulators. The two have said they plan to sell 579 stores under a revised deal with C&S Wholesale Grocers.
With the proposed divestitures, the companies would operate roughly 5,000 supermarkets. Including debt, the deal’s value is around $25 billion.
In Thursday afternoon trading Kroger shares were down about 1%, while Albertsons shares were up less than 1%. —Victor Swezey contributed to this article.
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