Albertsons Cos. CEO Vivek Sankaran and The Kroger Co. Chairman and CEO Rodney McMullen promoted their companies’ $24.6 billion merger deal in a video at a King Soopers store.
Posted on Monday by Sankaran on his LinkedIn page, the video shows the two CEOs discussing the merger—now under regulatory review—and how it stands to benefit customers, store associates and the neighborhoods served by their stores. Under the agreement, announced in mid-October, Kroger plans to acquire Albertsons in a transaction that would combine the nation’s two largest supermarket retailers.
“Thank you to Kroger CEO Rodney McMullen for hosting me at an impressive King Soopers store to talk about the benefits of our proposed merger and how we’ll be able to bring communities across America the food they need to thrive,” Sankaran wrote in his LinkedIn post for the video.
McMullen starts off the video—in which he and Sankaran are standing in the store’s produce department—by sketching out the possibilities for the Kroger-Albertsons merger, which would be the biggest-ever U.S. supermarket merger deal.
“The combination of Kroger and Albertsons is about creating more opportunities—more opportunities for our customers to find the food they love at lower prices, more opportunities for associates to grow their careers with us now and in the future,” he said in the video. “And the growth extends well outside of our doors. We see more opportunities for our farmers to sell more of their crops in more places, and more opportunities to bring communities across America the food families need to thrive.”
When the merger was announced last fall, Kroger said the combined company would invest $500 million of cost savings from merger synergies to lower grocery prices at the shelf. An incremental $1.3 billion also is earmarked for investment to enhance the customer experience in Albertsons Cos. stores. Since then, Kroger has noted that the price investment reflects its historical practices, with $5 billion invested since 2003 to lower pricing. That includes $130 million after the 2014 Harris Teeter acquisition and $110 million following the purchase of Roundy’s in 2017.
“For our customers, it’s about offering lower prices and more choices,” Sankaran said in the video. “Together we will provide a wider, better selection of the products customers need, want and love, with all the personalized offers that help families everywhere put foot on the table.”
Sankaran also addressed concerns that the Kroger-Albertsons merger would impact jobs. Two of the largest unions in the grocery sector, United Food and Commercial Workers International (UFCW) and the International Brotherhood of Teamsters, have officially voiced their opposition to the deal, arguing that the transaction poses a threat to job security, wages and benefits by lessening competition.
However, Kroger has said it expects to invest $1 billion to lift associate wages and benefits after the deal closes. In March, the retailer announced plans to invest over $770 million in associates for 2023, including to raise average hourly wages and improve health care options, among other items. The company said it raised average hourly rates by over 6% in 2022 and has now invested an incremental $1.9 billion in associate wages since 2018.
According to the International Center for Law & Economics, about two-thirds of Kroger employees and a majority of Albertsons employees are represented by UFCW.
“Together, we will also provide more opportunities for more associates to find a fulfilling career,” Sankaran said in the video. “This combination will secure good-paying union jobs, and it will provide our associates the incredible opportunity to create the future of food retail.”
Similarly, McMullen said the merger would benefit producers by giving farmers more ways to get food to families and communities. Opponents of the deal, including the National Grocers Association, have argued that a combined Kroger-Albertsons would create another retail “power buyer” with too much sway over manufacturers and producers in the marketplace.
“Together, we will create even more opportunities for local farmers. Farmers are the backbone of our business, and they play a crucial role in bringing fresh, healthy choices to families across America,” McMullen explained in the video. “This combination means more ways for local farmers to reach more families and more communities, which is great for their business and their family farms, and even better for their financial security.”
He and Sankaran also noted the boost that a united Kroger-Albertsons would give to their companies’ ongoing efforts to fight food insecurity. In June, Kroger said that, once the acquisition closes, it will set a target to donate 10 billion meals by 2030.
“And together, we will meaningfully invest in the communities we serve. You’ll see it—and, more importantly, feel it—from day one,” Sankaran said. “We are on a mission to end hunger in America. In fact, we recently announced a commitment to donate 10 billion meals by 2030—10 billion. That’s enough to feed every person in the cities of Seattle, Denver, Chicago and Boston every meal, every day, for nearly two years. Neither company could achieve this kind of impact alone.”
The video comes as Kroger and Albertsons face a potentially more difficult regulatory environment in winning approval for their planned merger.
Several weeks ago, the Federal Trade Commission and Department of Justice proposed new and tougher guidelines for antitrust enforcement. In addition, the U.S. Department of Agriculture unveiled a partnership with attorneys general in 31 states and the District of Columbia to sharpen competition and bolster consumer safeguards in food and agriculture, including in grocery, meat and poultry processing, and other markets.
Back in late April, McMullen and Sankaran cited some public “myths” about the merger in a Cincinnati Enquirer op-ed article. By and large, the two CEOs restated what they’ve said publicly since the emergence of the deal: No store closings or job cuts are upcoming, and the combined company plans to use its scale to lower prices, not increase them.
Kroger and Albertsons have estimated they would need to divest 100 to 375 stores to clear the antitrust review by federal and state regulators. The agreement also includes a ceiling of 650 store divestitures, at which point the two retailers could re-evaluate the transaction. Stores would be divested through direct sales to other operators and/or via a newly formed spinoff company, dubbed SpinCo.
McMullen has said Kroger still expects an early 2024 completion for the merger. Industry observers, though, have said antitrust approval likely will take longer for such a large transaction and could last as long as two years.