Divestiture Plan Would Give Carrs/Safeway New Owners
Carrs and Fred Meyer stores compete directly across the street from each other in Palmer.
The parent company of the Fred Meyer supermarket chain has a plan to maintain competition with Carrs/Safeway stores in Alaska while acquiring their parent company, Albertsons. A divestiture plan by Kroger would sell 413 of the merged company’s stores, including all 14 Carrs/Safeway stores in Alaska, to another national supermarket chain, C&S Wholesale Grocers.
$1.9 Billion Deal
Kroger and Albertsons entered into an agreement for the sale of stores, banners, distribution centers, offices, and five private label brands to C&S, which owns the Piggly Wiggly retail franchise.
The divestiture plan marks a key step toward the completion of the merger by extending a well-capitalized competitor into new geographies. The divestiture plan ensures no stores will close as a result of the merger and all collective bargaining agreements will continue.
Subject to fulfillment of customary closing conditions, including Federal Trade Commission and other governmental clearance, and the completion of the Kroger-Albertsons merger, C&S will pay Kroger an all-cash consideration of approximately $1.9 billion.
Kroger and Albertsons agreed to a $24.6 billion merger last October. Together, Idaho-based Albertsons and Ohio-based Kroger operate 4,996 stores, 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies, and 2,015 fuel centers across forty-eight states. The companies have a combined workforce of more than 710,000 employees. The merger gives Kroger access to northeastern states, while the companies overlap in West Coast markets.
“Following the announcement of our proposed merger with Albertsons Cos., we embarked on a robust and thoughtful process to identify a well-capitalized buyer who will operate as a fierce competitor and ensure divested stores and their associates will continue serving their communities in the ways they do today. C&S achieves all these objectives,” says Kroger Chairman and CEO Rodney McMullen.
Albertsons has owned Safeway since 2014, and Safeway took over the Alaska-based Carrs chain in 1999. As a condition of that merger, Safeway divested six locations to a joint venture of Bristol Bay Native Association and Associated Grocers, a regional cooperative of independent stores, which became Alaska Marketplace. The replacement retailers were out of business by 2001.
C&S has been around since 1918, mainly supplying wholesale goods to other supermarket chains, including Safeway and Target. Its main retail brand is the Grand Union chain of twelve stores in New York and Vermont. Its Piggly Wiggly chain is a franchise of nearly 500 independently owned supermarkets, mainly in the South.
“C&S is led by an experienced management team with an extensive background in food retail and distribution and has the financial strength to continue investing in associates and the business for the long run,” McMullen says. “Importantly in our agreement, C&S commits to honoring all collective bargaining agreements which include industry-leading benefits, retaining frontline associates and further investing for growth.”
By absorbing Albertsons and Kroger stores, C&S extends its national reach to the US Southwest and West Coast. Although some Kroger stores in Washington, Oregon, and California would be divested to C&S, none of the Kroger-owned Fred Meyer stores in Alaska are changing hands.
Update: An earlier version of this article mistakenly identified Bristol Bay Native Corporation part of the joint venture that took over six Carrs locations in 1999. It was Bristol Bay Native Association that was a part of the joint venture with Associated Grocers that took over the stores.