Aldi Eyed Kroger-Albertsons Stores Before C&S Deal

In the latest development surrounding Kroger’s proposed acquisition of Albertsons, it has come to light that before selecting C&S Wholesale Grocers as its divestiture partner, Kroger considered offers from multiple parties, including Aldi and Save Mart. This information was disclosed during oral arguments in the antitrust case filed by the Federal Trade Commission (FTC) and nine state attorneys general, according to the Denver Gazette.

Kroger, based in Cincinnati, Ohio, ultimately chose C&S Wholesale Grocers, the nation’s largest grocery wholesaler, to acquire 579 stores as part of the merger plan. The deal, if approved, would see C&S expanding its retail footprint, adding to its current operations of about two dozen physical stores across the U.S. However, this decision has raised concerns about C&S’s limited experience as a retailer compared to other interested parties, such as Aldi and Save Mart.

According to the Denver Gazette, oral arguments in a related antitrust case in Colorado revealed that both Aldi and The Save Mart Companies had likely shown interest in purchasing the stores. Aldi, which operates around 2,400 stores nationwide, was noted as one of the fastest-growing grocery chains in the U.S. The company has a history of acquisitions, including the purchase of Southeastern Grocers’ Winn-Dixie and Harveys Supermarkets in 2023. Aldi began converting some of these stores into its own brand earlier this year. Despite its expansive presence, Aldi does not currently operate in Colorado.

Read more: California Attorney General Bonta Stands Firm Against Albertsons-Kroger Merger

Save Mart, based in Modesto, California, also expressed interest in acquiring the stores, with the company’s CEO, Shane Sampson, being named during court proceedings. Per the Denver Gazette, this disclosure came unexpectedly, leading to the abrupt dismissal of witness Roger Davidson after he mentioned Sampson by name. Save Mart operates nearly 200 stores across California and Nevada.

The divestiture has been a central focus of antitrust challenges to the $24.6 billion merger between Kroger and Albertsons. The FTC and state attorneys argue that the deal could harm competition in the grocery sector, potentially leading to higher prices and fewer choices for consumers. The selection of C&S, which has been primarily known for its wholesale operations, has prompted questions from state attorneys about the company’s capability to effectively manage such a large retail operation.

Kroger and Albertsons’ legal teams disclosed in a filing in the District Court of Oregon that 92 parties initially expressed interest in purchasing the divested stores. Of these, 72 were identified as strategic buyers, while the remaining 20 were financial buyers. Despite this competitive process, C&S Wholesale Grocers emerged as the final choice, though the reasoning behind bypassing more experienced retailers like Aldi and Save Mart remains a point of contention.

The broader legal battle continues across multiple states. Closing arguments in Washington’s separate antitrust case against the merger are scheduled for October 23, while Colorado’s case is expected to wrap up the following day. As of now, no decision has been announced in the federal case overseen by the FTC.

The outcome of these cases will have significant implications for the grocery industry, particularly regarding the balance of power between major players like Kroger and Albertsons and smaller or regional chains.

Source: The Denver Gazette