Attorney: Kroger selling stores in Albertsons merger to a 'liquidator,' not competitor

An attorney for the state of Colorado, as it seeks to halt the $25 billion Kroger takeover of Albertsons , said the merger would reduce competition and mean higher costs for shoppers.

Assistant Attorney General Arthur Biller directed particular ire toward the New Hampshire-based company, C&S Wholesale Grocers , which would acquire 579 stores sold off by the grocers after they combined. He charged the company wasn't really a retail grocery store operator, but rather "a liquidator."

'Kroger picked a buyer that wouldn't put up much'

"They are opportunistic buyers... there's no intension of running those stores long-term," Biller told Denver District Court during the opening arguments of the state's antitrust trial against the deal. "Kroger picked a buyer that wouldn't put up much competition."

To allay concerns about maintaining competition after the merger, Kroger has agreed to sell 579 stores for $2.9 billion to C&S Wholesale upon completing the Albertsons deal. Currently, the grocery supplier owns a modest retail operation of less than 25 retail supermarkets, including a dozen Piggly Wiggly stores.

Plans to ultimately sell off divested stores?

In his opening remarks, Biller cited comments that C&S Wholesale made in recent years to the investment community. During the litigation, C&S Wholesale executives have defended their plans to acquire the stores, saying their company is transforming its business model from a grocery supplier to include a $20 billion retail operation outlined in a divestiture deal with Kroger.

Biller said C&S Wholesale agreed to the deal because it is acquiring the stores Kroger will sell off for a relatively low price, mostly covered by the value of the underlying real estate. He said C&S Wholesale would ultimately sell off or close the stores, following a historical pattern.

Kroger lawyer: government lawyers spinning 'conspiracy theory'

Kroger attorney Matt Wolf dismissed Biller's characterization as a "conspiracy theory" and said C&S Wholesale would preserve competition for consumers.

"Buying something for $3 billion and selling it for $2 billion is not a very good business plan," Wolf told the court.

Wolf added Kroger's plan was to lower grocery prices to better compete with nontraditional grocers, such as Walmart, Costco and Amazon.

Expected to last three weeks, the trial is one of three concurrent antitrust cases pending against the deal. The trial overlaps with a similar state trial in Washington regarding the merger that began on Sept. 16. It also begins nearly two weeks after a critical hearing over the merger in U.S. District Court in Portland, Oregon , wrapped up, which is now being deliberated by a federal judge .

How big is the pending merger?

First announced in October 2022, Cincinnati-based Kroger wants to buy all outstanding shares of Boise, Idaho-based Albertsons, adding most of its employees and stores to its supermarket operation.

If the deal is completed, Kroger would:

But regulators at both federal and state levels have expressed deep concerns. They are worried C&S Wholesale Grocers' limited experience as a retailer will prevent it from being a strong competitor and that could lead to higher prices for consumers. They are also worried about the job security of the 60,000 workers that could be moved to C&S Wholesale Grocers.

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