In a bid to address concerns raised by the federal government, supermarket chains Kroger and Albertsons have revealed plans to sell more of their stores, including all Safeway locations in Arizona, as part of their proposed merger. The move comes after Arizona Secretary of State Adrian Fontes and Attorney General Kris Mayes expressed their opposition to the merger, citing potential price increases and reduced options for shoppers.

Under the revised divestiture plan, Kroger and Albertsons intend to sell a total of 579 stores in overlapping markets to C&S Wholesale Grocers, a grocery supplier based in New Hampshire, for a sum of $2.9 billion. This represents an increase from the initial plan announced in September, which involved the sale of 413 stores for $1.9 billion to C&S.

As part of the updated arrangement, Kroger will divest its Haggen banner to C&S, while C&S will now hold licensing rights for the Safeway banner in Arizona and Colorado, as well as the Albertsons banner in California and Wyoming. Furthermore, C&S will gain access to select private-label brands carried in the stores. The proposal ensures that all stores will remain open and that labor agreements will be upheld.

Despite the new plan, it remains uncertain whether regulators will be satisfied. In February, the U.S. Federal Trade Commission (FTC) filed a lawsuit to block the $24.6 billion merger, arguing that reduced competition would lead to higher grocery prices and lower wages. The FTC expressed dissatisfaction with the initial divestiture plan, deeming it inadequate and claiming that it would leave C&S with a disjointed collection of stores and brands, making it ill-equipped to compete with the combined Kroger and Albertsons entity.

C&S CEO Eric Winn expressed confidence in the updated divestiture package, asserting that it would enable the stores to continue serving their communities successfully for years to come. Kroger and Albertsons had initially announced their merger plans in October 2022, citing the need to enhance competitiveness against major rivals such as Walmart and Amazon.

The fate of the proposed merger now rests on regulatory approval, as Kroger and Albertsons navigate the complexities of addressing anti-competitive concerns while striving to maintain their market positions.