AHODF - Albertsons may have to expand divestment package in Kroger deal - report

2023-03-31 15:06:37 ET

Albertsons ( NYSE: ACI ) and Kroger ( NYSE: KR ) may need to expand the number of stores in a potential divestment as they try to gain regulatory approve for their $24.6 billion deal.

The grocery chains started a sales process for 250-300 stores last month, though the number may need to increase to appease antitrust regulators at the Federal Trade Commission, according to a Dealreporter item, which cited sources familiar.

The companies are seeing robust interest for the stores, according to the report. Potential buyers include Ahold Delhaize ( OTCQX:ADRNY ), Amazon's ( AMZN ) Whole Foods, Dollar General ( DG ), several regional players and some Hispanic-focused grocers.

Market definition is going to be an important part of the FTC review of the supermarket megadeal and the regulator is likely going to need to include dollar stores as part of its market definition, Dealreporter said. The FTC review has also been expanded to including a review of consumer packaged good companies and how much they sell to Albertsons ( ACI ) and Kroger ( KR ).

The report comes after Reuters last month said the supermarket chains identified up to 300 stores to sell in a bid to please regulators.

On Thursday RBC said it sees upside for Albertsons ( ACI ) regardless of the state of its contested merger with Kroger ( KR ). The two grocers are likely to be required to divest “somewhere near (or potentially even above) the 650 store limit to receive clearance.” The analysts see a 35% likelihood the deal closes.

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