VALLEY – In 2022, the Kroger Company proposed merging with Albertsons Stores, owner of Safeway supermarkets. As part of the proposed merger, 579 Safeway stores and distribution hubs will be sold to C&S Wholesale Grocers to satisfy antitrust regulations and not concentrate supermarket ownership.
Kroger owns the City Market brand, and Albertsons owns Safeway; both have stores in Alamosa. The Alamosa Safeway store is included in the plan to sell stores to C&S.
The attorney generals of Colorado and Washington, the Federal Trade Commission, and unions have opposed the merger.
Many workers at the stores are members of the United Food and Commercial Workers Union Local 7 (UFCW), representing 23,000 members in the grocery, meat packing, food processing, healthcare, manufacturing, and cannabis industries across Colorado. The union is part of the Stop the Merger Coalition, including over 100 national, state, and local organizations that oppose the merger.
Manuel Medina is a union steward with the UFCW and has worked as a manager at the Monte Vista Safeway store for 15 years. In an interview with the Valley Courier, he said this regarding the proposed merger, "It is scary. We don't know if they are going to close the store or keep it open. There are no guarantees on what they are planning."
Medina added, “They just announced they are going to sell us [Monte Vista] to King Soopers and Alamosa [Safeway] to C&S. There is no guarantee. In the past, when Albertsons bought Safeway, they told the workers the same thing, ‘We’re not going to close any stores. Everything is going to be fine.’ And then all the sudden, they started closing stores…there is no guarantee.”
In a statement issued by the Stop the Merger Coalition, Bill Valdez, a UFCW member from Colorado Springs said, “As a member of our last collective bargaining team, I'm worried about how the merger would impact our ability to advocate for better wages, good health benefits and a strong pension.”
Elizabeth Battiste, public information officer with UFCW told the Valley Courier, "There is no guarantee these stores will remain open, this creates a lot of uncertainty across Colorado and the country. We've seen in previous mergers that stores have closed. There was a disastrous merger between Albertsons and Haggen. This was considered to be an absolute disaster. We are very concerned about this merger and the impact on rural communities like Alamosa. These stores are a community hub where people go to get food and prescriptions filled and also the center of our communities.”
Albertsons purchased Safeway in 2015 and divested 146 stores to a supermarket chain called Haggen to secure regulatory antitrust approval.
Haggen, which was majority-owned by a private equity firm, was unprepared to manage the expansion. Seven months after acquiring the stores, Haggen filed for bankruptcy and closed 127 of them.
In 1998, Albertsons bought a Montana grocer, Buttery Food and Drug, and agreed with the Federal Trade Commission to divest 15 stores. An analysis by the news site Boise Dev concluded 13 of the 15 locations divested had closed.
According to a statement from Kroger, "The proposed merger will create meaningful and measurable benefits for America's consumers, Kroger and Albertsons Cos. associates, and communities that both Kroger and Albertsons Cos. serve by expanding access to fresh, affordable food and establishing a more compelling alternative to large, non-union retailers."
Rodney McMullen, Kroger's Chairman and CEO said in a statement, "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.”
McMullen added, "Importantly, the updated divestiture plan continues to ensure no stores will close as a result of the merger and that all frontline associates will remain employed, all existing collective bargaining agreements will continue, and associates will continue to receive industry-leading health care and pension benefits alongside bargained-for wages. Our proposed merger with Albertsons will bring lower prices and more choices to more customers and secure the long-term future of unionized grocery jobs."
The Kroger Company's annual report boasts this regarding its employees, “We prioritized investment in our people. We strive to create a culture of opportunity for more than 414,000 associates and take seriously our role as a leading employer in the United States. In 2023, we invested more than ever in our associates by continuing to raise our average hourly wage to nearly $19, or nearly $25, including industry-leading benefits."
In 2023, Mc Mullen received $18.1 million in total compensation, and several executives were paid between $4.3 million to $5.9 million.
Breaking up is hard to do.
If either Kroger or Albertsons pulls out of the merger, Kroger is liable for a $600 million breakup fee.
According to filings with the Securities and Exchange Commission, "Parent will be obligated to pay a termination fee of $600 million if the Merger Agreement is terminated by either party in connection with the occurrence of the Outside Date…" If the deal fails, Albertsons walks away with $600 million.
What might happen to Safeway employees if C&S buys the stores where they work? Rick Cohen is the executive chairman of C&S and the CEO of warehouse robotic firm Symbotic.
According to the company, "It is an automation technology leader reimagining the supply chain with its end-to-end, A.I.-powered [artificial intelligence] robotic and software platform. Symbotic reinvents the warehouse as a strategic asset for the world's largest retail, wholesale, and food & beverage companies… Symbotic enables companies to move goods with unmatched speed, agility, accuracy and efficiency."
In May, Symbotic posted quarterly revenue of $424 million, which translates to almost $1.7 billion worth of warehouse robots sold annually.
The Kroger Albertsons deal is mired in litigation. Earlier this week, a Denver District Judge granted a preliminary injunction and canceled the Aug. 12 hearing on the matter.
