M&A  December 8, 2022

AG Weiser thrusts Colorado into fight against Albertsons-Kroger merger

DENVER — Colorado Attorney General Phil Weiser said Thursday that the Centennial State will “lead” a “multi-state effort” to investigate the proposed $24.6 billion merger of Kroger Co. (NYSE: KR), the parent company of Colorado-based grocery chain King Soopers, and Albertsons Cos. (NYSE: ACI).

The state’s top lawyer also revealed that his office has filed a brief in support of a lawsuit from Washington Attorney General Bob Ferguson that seeks to block a $4 billion payout to Albertsons investors.

“I’ve got deep concerns about this merger,” Weiser said Thursday during a Zoom call with reporters. “… The concerns are related to consumers who are already concerned about the prices they’re paying at the grocery store and the possibility that prices are going to go up.”

Additionally, the potential for store closures — and the resulting creation of food deserts — is distressing for Colorado regulators, as is the impact of job security for grocery store workers, he said.  

“Over the course of the merger review, we will be investigating each of these concerns very carefully,” Weiser said. 

Weiser’s office is partnering with Washington on this investigation effort. Other states may also participate, but Weiser did not offer any specifics.

Quoting from a letter Weiser said he recently received from a resident in Estes Park, the attorney general said Coloradans are demanding his office do “all you can” to “prevent a grocery monopoly.”

Kroger and Albertsons went public with their merger plans in October. The move, which the companies hope to complete by 2024, would represent the largest combination of grocery chains in United States history.

“Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores,” Kroger CEO Rodney McMullen said when the deal was announced. “This merger advances our commitment to build a more equitable and sustainable food system by expanding our footprint into new geographies to serve more of America with fresh and affordable food and accelerates our position as a more compelling alternative to larger and non-union competitors.”

The October merger proposal immediately raised the eyebrows of regulators and labor organizations.

“The proposed merger of these two grocery giants is devastating for workers and consumers alike and must be stopped,” Kim Cordova, president of the United Food & Commercial Workers Local 7, said in a prepared statement. “Just as our UFCW workers stood together to negotiate landmark new contracts with both Kroger and Albertsons/Safeway last year across the western U.S., we will stand united to fight for access to nutritious food, a safe shopping experience, and investments in good jobs in our communities. Essential UFCW grocery store workers emerged stronger from the COVID-19 pandemic, winning landmark protections against the virus, store violence and other threats. Standing together, we know our voices are stronger than the corporations’ anti-worker rhetoric.”

This week, Kroger said it had received a second request for information from the Federal Trade Commission, extending regulators’ antitrust review timeline. 

“We will continue to work cooperatively with the Federal Trade Commission as it conducts its review of the merger, including developing a thoughtful divestiture plan. Kroger continues to expect to complete the merger in early 2024,” Kroger said in a statement this week. 

Of particular interest to regulators, including Weiser, is Albertsons’ plan to pay a $4 billion dividend to shareholders — much of which would go to private-equity firms that own significant stakes in the grocer — in advance of the merger’s closing. 

Critics say such a move could cripple Albertsons’ ability to compete, thus harming consumers and employees. 

“We should be concerned that if they’re able to take money out of the company, leaving it poorly capitalized, it could undermine the ability of the company to compete given that we already have a somewhat concentrated market,” Weiser said. “… We shouldn’t allow them to take that step. That’s why we’ve taken the important step of filing a brief in this case in support of Washington’s motion not to allow this [dividend payment] to proceed.”

DENVER — Colorado Attorney General Phil Weiser said Thursday that the Centennial State will “lead” a “multi-state effort” to investigate the proposed $24.6 billion merger of Kroger Co. (NYSE: KR), the parent company of Colorado-based grocery chain King Soopers, and Albertsons Cos. (NYSE: ACI).

The state’s top lawyer also revealed that his office has filed a brief in support of a lawsuit from Washington Attorney General Bob Ferguson that seeks to block a $4 billion payout to Albertsons investors.

“I’ve got deep concerns about this merger,” Weiser said Thursday during a Zoom call with reporters. “… The concerns are related to consumers…

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