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NEW YORK – C&S Wholesale Grocers is reportedly in talks to potentially buy grocery stores from Kroger and Albertsons as the retailers pursue regulatory approval of a proposed merger that could require divestiture of hundreds of supermarkets.
News of the talks was first reported by Bloomberg News and picked up by other media outlets. Reuters, citing an unidentified source said to be familiar with the matter, reported that Japan’s Softbank Group would provide financial backing for the acquisitions. The deal value and number of stores involved was not immediately known.
Keene, N.H.-based C&S supplies more than 7,500 supermarkets. The privately held company also operates a few stores of its own, including Grand Union stores in Vermont and New York and Piggly Wiggly stores in the South and Midwest.
In announcing the proposed merger in October, Kroger and Albertsons acknowledged that the deal triggers antitrust concerns and said they were willing to divest up to 650 stores to pass antitrust muster. Some analysts speculated the companies could struggle to find buyers because Albertsons’ stores are unionized, making them less attractive to private equity and other potential bidders.
Kroger and Albertsons initially said that the deal could close early this if it was approved by the Federal Trade Commission and the Department of Justice and survives any court challenges.
Opposition to the merger galvanized opposition from the supermarket retailers’ biggest unions and others, including the attorneys general in three states and the District of Columbia, who filed lawsuits claiming that the deal runs afoul of antitrust and consumer protection laws.
Kroger said it anticipates about $1 billion of annual cost savings within four years of the deal closing.
“Our strategy will always be to continue to get costs out of the business and then turn around and give some of that to the customer, and certainly in this inflationary environment it’s even more important to try to help support the customers’ budget,” Rodney McMullen, Kroger’s chairman and chief executive officer, said in an interview on the day the proposed deal was announced.
