If Kroger's proposed $24.6 billion acquisition of Albertsons goes through, the transaction will create a big new player in Arizona's supermarket business.
C&S Wholesale Grocers, with no current supermarket operations in the state, overnight could emerge as a rival almost as large here as Kroger, which owns Fry's Food Stores and Smith's locations.
Kroger currently operates 131 Arizona supermarkets and would add an expected 34 Albertsons and Safeway locations if regulators, including the Federal Trade Commission, give a green light to the deal. C&S stands to take over the other 101 Albertsons or Safeways locations in the state.
The fate of specific locations in Arizona and elsewhere hasn't been announced.
This updated announcement, made on April 22, would mark a significant increase in C&S' presence in Arizona, and aims to address criticisms made by the FTC and others. Previously, the company was slated to buy 24 Albertsons or Safeway supermarkets in Arizona among 413 properties nationally. Under the latest proposal, C&S would acquire a total of 579 Albertsons or Safeway locations, including the 101 Arizona stores.
Who exactly is C&S Wholesale Grocers?
C&S, which is based in Keene, New Hampshire, operates more than 160 franchise and company-owned stores, said Lauren La Bruno, a company vice president, in an email to The Arizona Republic. That's in addition to supplying more than 7,500 independent supermarkets, retail chain stores and military bases with products and services. The company's stores include those under the Piggly Wiggly and Grand Union brands.
"C&S is deeply committed to our transformation strategy, which includes the expansion of our retail footprint," she wrote. "The purchase of these stores will enable C&S to be one of the leading grocery retailers in the United States."
The company has an experienced management team with an extensive background in food retail and distribution, she added, along with the financial strength to continue investing in employees and the business.
"C&S also brings experience with the merger process, having been an FTC-approved buyer in prior grocery transactions with a strong track record of successfully transitioning union employees and their associated collective-bargaining agreements," La Bruno added.
How big is C&S?
Progressive Grocer, an industry trade publication, ranks C&S 17th on its latest list of 100 top food retailers with $34.7 billion in annual revenue. Kroger is fourth at $148.3 billion and Albertsons/Safeway is ninth at $77.6 billion.
C&S has been around since 1918, but the privately held company doesn't divulge much financial information.
The company is expected to pay $2.9 billion to Kroger for the supermarkets and other operations such as distribution centers if the acquisition is consummated. That was up from a prior purchase price of $1.9 billion for the original 413 stores. Kroger described C&S as a well-capitalized competitor with a strong balance sheet.
What is in dispute?The legal lines in the Kroger-Albertsons merger are drawn
How will the merger affect competition?
Eric Winn, CEO of C&S, in a statement expressed confidence that the "expanded divestiture package will provide the stores, supporting assets and expert operators needed to ensure these stores continue to successfully service their communities for many generations to come."
Somewhat ironically, the expanded divestiture agreement sets up C&S as a stronger rival to Kroger/Albertsons when the real competitive targets for the latter are Walmart, Amazon, Costco, Target and other nonunion grocery giants. C&S has pledged to recognize the current union workforces at the Albertsons and Safeway stores that it acquires while maintaining all collective-bargaining agreements.
The FTC, in opposing the merger along with the attorneys general of Arizona and several other states, said the original divestiture plan "falls short of mitigating the lost competition between Kroger and Albertsons."
Also, the federal agency said C&S would face "significant obstacles stitching together the various parts and pieces from Kroger and Albertsons into a functioning business, let alone a successful competitor against a combined Kroger and Albertsons."
The three largest supermarket chains based on annual revenue in Progressive Grocer's list are Walmart, Amazon and Costco. Walmart leads with $420.6 billion in revenue, nearly triple the $148.3 billion for fourth-place Kroger.
What union workers think of C&S
If the merger goes through, C&S will inherit thousands of union workers at Albertsons and Safeway stores in Arizona, and local union officials are still evaluating the situation.
"While we are encouraged by C&S Wholesale's commitment to investing in Arizona's retail food sector, there are still a lot of unanswered questions regarding the pending Kroger-Albertsons merger and its potential impact on our communities," said Jim McLaughlin, president of United Food and Commercial Workers Local 99, which represents thousands of supermarket employees in the state.
In a note to The Republic, he also commended Arizona Attorney General Kris Mayes, who has joined a lawsuit against the deal, for her efforts to protect working Arizonans and their families.
According to La Bruno, C&S has been a union employer for several decades and has both union and non-union workers.
"We believe that C&S acquiring these stores will provide these (Albertsons and Safeway) associates with many benefits, including enhanced career paths, new roles, the ability to train and develop new skill sets and so much more that will enable them to stay and grow with us for many years," she wrote in her note.
Reach the writer at russ.wiles@arizonarepublic.com.
