In a bid to secure federal approval for their proposed merger, Kroger and Albertsons have announced plans to sell additional stores, including dozens in Illinois. The divestiture agreement, aimed at addressing concerns from regulators about competition, will involve selling a total of 579 stores across both companies' portfolios to C&S.

According to a press release, 35 Kroger and Albertsons-family locations in Illinois will be sold to C&S. While the exact number of affected stores was not specified, it is expected to include several grocery chains operating in the state. Currently, Albertsons operates 188 Jewel-Osco locations in Illinois, Indiana, and Iowa, while Kroger has its own banner stores in Illinois.

Rodney McMullen, Kroger's Chairman and CEO, stated, "We have reached an agreement with C&S for an updated divestiture package that maintains Kroger's commitments to customers, associates, and communities, addresses concerns raised by regulators, and will further ensure that C&S can successfully operate the divested stores as they are operated today."

The companies have emphasized that no stores will be closed as a result of the merger, and all existing collective bargaining agreements will remain intact. However, critics have raised concerns about C&S's lack of experience in handling a large number of stores. In response, Kroger and Albertsons have agreed to provide additional corporate and office infrastructure to address these concerns.

Illinois, along with seven other states, has joined a lawsuit filed by the Federal Trade Commission (FTC) seeking to block the merger. The FTC argues that the $24.6 billion deal would eliminate competition and result in higher prices for consumers. The lawsuit is scheduled to be considered by an administrative law judge at the agency, with the FTC also filing a separate lawsuit in the U.S. District Court in Oregon requesting a temporary injunction.

Kroger and Albertsons initially announced their merger plans in October 2022, stating that it would help them better compete with retail giants such as Walmart, Amazon, and Costco. Together, the merged companies would control approximately 13% of the U.S. grocery market, while Walmart currently holds 22%.

Both Kroger and Albertsons have expressed their intention to challenge the FTC's decision in court. They argue that without the merger, customers may experience higher food prices and store closures. Kroger stated, "This decision only strengthens larger, non-unionized retailers like Walmart, Costco, and Amazon by allowing them to further increase their overwhelming and growing dominance of the grocery industry."

The FTC, highlighting that this would be the largest grocery merger in U.S. history, contends that it would also eliminate competition for workers, potentially impacting their ability to negotiate higher wages, better benefits, and improved working conditions. The United Food and Commercial Workers union, representing a majority of Albertsons and Kroger employees, has opposed the merger, citing concerns about its impact on workers' jobs and livelihoods.

As part of the merger deal, Kroger has committed to investing $500 million to lower prices and $1.3 billion in store improvements at Albertsons once the deal closes. The company has previously made similar investments in price reductions when merging with other grocery chains.

While the revised divestiture agreement includes the sale of additional stores in Illinois, the outcome of the merger's approval remains uncertain. The companies' efforts to address regulatory concerns and provide solutions for potential competition issues will be pivotal in determining the future of the proposed merger.