Kroger and Albertsons agree to sell more stores to satisfy regulators scrutinizing merger deal

(AP) - Supermarket chains Kroger and Albertsons said Monday they will sell more of their stores in an effort to quell the federal government’s concerns about their proposed merger.

The companies now plan to sell 579 Kroger and Albertsons stores in markets where they overlap to C&S Wholesale Grocers, a New Hampshire grocery supplier and operator, for $2.9 billion. Under the initial divestiture plan, announced in September, C&S had planned to purchase 413 stores for $1.9 billion.

It’s unclear if the new plan will satisfy regulators. In February, the U.S. Federal Trade Commission sued to block the $24.6 billion merger between the grocery giants, saying the lack of competition would lead to higher grocery prices and lower wages for workers.

(Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)

The FTC also said the initial plan to divest 413 stores to C&S was "inadequate" and would give C&S a hodgepodge of unconnected stores and brands, leaving it ill-equipped to compete with a combined Kroger and Albertsons.

Under the updated plan, Kroger would sell its Haggen banner to C&S. C&S would also license the Albertsons banner in California and Wyoming and the Safeway banner in Arizona and Colorado. C&S would also get access to some private-label brands in the stores. Under the proposal, C&S would keep all of the stores open and honor any labor agreements.

According to Kroger's website, the company owns 126 retail stores in Arizona. The website also lists Fry's as one of the grocery store brands operated by Kroger. Meanwhile, Albertson's website lists a number of grocery store brands they operate under, which includes Safeway. Both Albertsons and Safeway have a presence in Arizona.

"We are confident this expanded divestiture package will provide the stores, supporting assets and expert operators needed to ensure these stores continue to successfully serve their communities for many generations to come," C&S CEO Eric Winn said in a statement.

Kroger and Albertsons announced their planned merger in October 2022. The companies say it’s necessary so they can better compete with Walmart, Amazon and other big rivals.