(Reuters) -Kroger and Albertsons Cos will sell an extra 166 stores to C&S Wholesale Grocers under an amended deal to get regulatory approval for their proposed $25 billion merger, the companies said on Monday.
The companies have been looking to offload stores to address regulatory concerns that the merger would lead to higher prices, store closures and job losses that have risen since they first announced the merger in October 2022.
Under the new agreement, C&S will pay Kroger an all-cash consideration of about $2.9 billion, up from the previous payout of $1.9 billion.
Kroger had earlier proposed divesting 413 stores and eight distribution centers to C&S Wholesale Grocers.
The additional 166 stores will see a total of 579 stores being sold to and operated by the new owner, C&S.
In February this year, the U.S. Federal Trade Commission (FTC) and eight states sued to block the deal, saying it would raise grocery prices for millions of Americans.
A district court in Oregon has set an August date for a hearing the FTC’s bid for a preliminary injunction to block the deal, which would strengthen Kroger’s position as the second-largest player in the U.S. grocery market behind Walmart.
Kroger CEO Rodney McMullen said the new plan “… continues to ensure no stores will close as a result of the merger and that all frontline associates will remain employed.”
Under the amended agreement, Kroger will also sell the Haggen banner to C&S and also provide access to the Signature and O Organics private label brands.
“One of the primary arguments against the original divestiture package was that C&S does not have meaningful operational experience and that they have a history of flipping retail assets. In our view, more stores does not change that argument much,” Steven Shemesh, RBC Capital Markets analyst, said.
(Reporting by Ananya Mariam Rajesh and Juveria Tabassum in Bengaluru; Editing by Anil D’Silva and Tasim Zahid)
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