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Kroger, Albertsons may need to divest even more stores

In order for the proposed merger deal to go through, the companies may need to sell more stores than originally planned, according to a new report

In the latest merger news, Kroger and Albertsons might have to divest of even more stores than originally planned in order to get past regulators’ antitrust concerns, according to a new report.

The proposed $24.6 billion merger deal between Kroger and Boise, Idaho-based Albertsons was first announced in October. The companies have a combined total of nearly 5,000 stores in 48 states, which would make the proposed new entity a rival for Walmart and Amazon — two of the current retail giants.

That kind of reach has antitrust regulators concerned. Kroger and Albertsons initially said they would divest between 100 to 375 stores to alleviate antitrust concerns. The companies later narrowed that range to 250 to 300.

But according to the Puget Sound Business Journal — citing reporting from the financial intelligence site Dealreporter — the companies might have to divest even more stores to get regulatory approval.

According to a spokesperson from Kroger:

“Kroger will not close any stores, distribution centers or manufacturing facilities as a result of this merger, including stores that may need to be divested to obtain regulatory approval. No exceptions, no excuses. We are in the process of working with regulators to develop a thoughtful plan for store divestitures to ensure that any divested stores are sold to qualified operators with appropriate management experience, a sound business plan, strong balance sheet and the financial stability to continue to succeed and serve their communities.”

Dealreporter also named companies interested in buying the stores Kroger and Albertsons will aim to sell. Potential buyers, according to Dealreporter, include: Ahold Delhaize and Whole Foods, as well as Dollar General, regional grocery operators, and some Hispanic grocery companies.

Markets where Kroger and Albertsons have overlap include Seattle, Portland, Denver, Los Angeles and Phoenix, where there is significant overlap in stores. The two companies combine for more than 40% of the market share in Seattle, Portland, Denver and Phoenix, specifically.

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