Many of us will be able to remember the location where we were, when we heard or learned that Kroger and Albertson’s have come to terms to merge the two largest conventional retailers into one company! The two competitors, cutting a deal in total silence and away from any leaks, before they jointly in perfect collaboration released the exact same press release within minutes of each other.
On October 14, 2022, Kroger and Albertson’s both announced the terms to join together these companies into a model that would supply 85 million households with services. At a price of 24.6 billion dollars, Kroger will take over Albertson’s operations on a date to be announced in 2024.|
Currently, these two companies employ more than 710,000 workers in about 5,000 stores with a combined 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies and 2,015 fuel centers across 48 states. This will quickly put Kroger in the east part of the country where they currently have no footprint.
In 2021 the companies on a combined basis delivered $210 billion in revenue, $3.3 billion in net earnings, and $11.6 billion of adjusted EBITDA. The sale is not finalized, as it must be approved and pass anti-trust tests. Some say it will not go through, where others feel it will.
Your UFCW International Union is evaluating and preparing to challenge or promote this merger, but it must be in the members’ best interest. There is a concern that in Texas, New Mexico, Arizona, Nevada, California, Oregon, and Washington, it will result in stores being required to be sold to a competitor to pass federal regulations. No one knows which stores, but some of us remember what happened in Albuquerque when Albertson’s acquired American Stores. We have seen a number of Albertson’s stores sold off to Raley’s and a few others to comply with the Federal Trade Commission requirements. The two have created a public company called SpinCo to sell off an estimated 100 to 375 stores, because they know to be approved, they will be required to divest certain stores. The problem is we believe they will pick stores that have Union Health Benefits, and a Union Pension to spin off. Once again, first the transaction must be approved, and then there is about 18 to 24 months before this happens. Will SpinCo assume Union members’ current benefits and Union Collective Bargaining Agreements? This is something that will be pursued over the next year. The UFCW International Union, which represents over 1 million Union members is very concerned and involved because they have members across these areas mentioned above.
Your Union reached out to the New Mexico Attorney General, Hector Balderas on October 25, 2022, asking him to stop the transfer of $4 billion dollars on November 7, 2022, until more research and details could be investigated. We have some areas in New Mexico where we have an overlap of Kroger, Albertson’s, and Safeway stores.
I have seen a handful of mergers over my 28 years at Local 1564 and none match the size and scope of this one. The merger is expected to take 18-24 months if the Federal Trade Commission approves it. Your Union along with various local Unions met with the FTC over the effects and ramifications of our concerns if this goes through. We met on November 1, 2023 in Denver. We believe the FTC will reject the merger, and then we expect Kroger and Albertson’s to sue the FTC to overturn this decision. We shall wait and see.