After three weeks of testimony in Denver District Court, a megamerger trial in Colorado is nearing its conclusion. There’s been a lot to take in during the sometimes 10-hour days and attorneys from the Colorado Attorney General’s Office, Kroger and Albertsons are scheduled to wrap up Thursday.
But if you’re just tuning in, here are some numbers and notes we’ve learned that could impact Colorado:
The big deal
$24.6 billion
Amount The Kroger Co. plans to pay Albertsons Companies Inc. shareholders1 on close of the merger (that’s $34.10 per share)
105
Albertsons owns 103 Safeway stores and two Albertsons in Colorado. Kroger owns 150 stores: 118 King Soopers and 32 City Market stores.
Kroger would keep all of its Colorado stores and 14 Safeways. C&S Wholesale Grocer would buy the remaining 91 Albertsons-owned stores in Colorado.
$40 million
Kroger plans to invest $1 billion2 to lower prices and invest in newly acquired Albertsons stores. Colorado’s share would be $40 million.
Union stance
King Soopers union members of UFCW Local 7 oppose the merger. In January 2022, 8,400 Colorado workers went on strike, demanding higher wages and workplace safety. Not all King Soopers are unionized.
14
How many Safeways going to Kroger (see map for addresses):
- Burlington
- Colorado Springs
- Estes Park
- Falcon
- Fort Morgan
- Fountain
- La Junta
- Lamar
- Leadville
- Monte Vista
- Pueblo
- Salida
- Trinidad
- Walsenburg
The divestiture
$2.9 billion3
Price C&S Wholesale Grocer would pay Kroger for 579 stores as part of revised divestiture4 to get the deal approved by regulators. Of those, 95 are currently owned by Kroger.
91
In Colorado, C&S would acquire 91 Albertsons-owned stores (89 Safeways and two Albertsons in Pueblo and Durango), two distribution centers and a dairy plant owned by Albertsons in Denver.
CEO offer
C&S, which distributes food to 7,500 independent grocery stores, offered Albertsons’ Chief Operating Officer Susan Morris the job of CEO of its new retail division if the merger is completed. Morris, who went to high school and college in Colorado, was previously Albertsons’ division president in Denver.
$150 million
C&S plans to invest $150 million to lower prices at the 91 Colorado stores.
1,000+
Number of offers C&S is making to Albertsons corporate employees nationwide, which includes the entire division in Colorado.
“South of 8,000”
Number of Albertsons grocery workers in Colorado offered jobs at C&S. That’s “100%,” C&S Wholesale CEO Eric Winn testified.
The competition
Without a merger, Kroger and Albertsons say they can’t scale or grow fast enough to catch up with the grocery stores they believe are their true competition. The AG’s office said the merger would result in fewer grocery stores and higher prices in rural Colorado.
5
Number of other stores King Soopers customers shop for groceries each month, said Stuart W. Aitken, Kroger’s chief merchant and marketing officer. They also shop at Walmart, Costco and Trader Joe’s.
14 cents
Share of each dollar an Albertsons customer spends at Albertsons stores. The “share of wallet” breakdown, according to Albertsons CEO Vivek Sankaran’s testimony:
- 14 cents ➔ Albertsons/Safeway
- 20 cents ➔ Walmart
- 16 cents ➔ Kroger
- 5 cents ➔ Amazon
- Remainder ➔ Whole Foods, Trader Joe’s, Costco and others
Top retailers
Independent market research firm Numerator tracks the top retailers by regional market. In the West region, which includes Colorado, Costco, at 16.3%, has the largest share of consumer spending on consumer-packaged goods (like Coca-Cola drinks and Oscar Mayer hot dogs), followed by Walmart, at 15.3%, Albertsons, 11.5%; Kroger, at 9.9%; and Amazon, at 5.5%.
Pricing: Who is more expensive?
3%
How much higher Kroger prices are than Walmart’s, according to Kroger CEO Rodney McMullen
10-12%
How much higher Albertsons prices are than Kroger’s overall.
10.8%
How much higher Albertsons prices are in Colorado than King Soopers and City Market stores. In other words, $100 of groceries purchased at King Soopers would cost $110.80 at a local Safeway.
1.8%
How much higher prices at Kroger’s “mountain no comp” stores5 are than other stores in the same Colorado region. That makes Safeway prices 9% higher than the “no comp” City Markets on the Western Slope, experts testified.
8
City Markets in Kroger’s “mountain no comp” zone, indicating little to no competition. Kroger raised prices at the stores without losing shoppers. Those stores are in Aspen, Breckenridge, Carbondale, Eagle, El Jebel, Glenwood Springs, Granby and New Castle.
10%
Percent of profits C&S plans to reinvest in lowering prices, or about $150 million, Winn said. Asked by AG lawyers, Winn acknowledged that the plans are 0% in year one and $77 million in year two.
What’s in it for Colorado?
255
Number of Albertsons and Kroger-owned stores before merger
255
Number of Kroger and C&S-owned stores post merger, at least on day one. The AG’s concern is C&S is a weak partner and will close stores that don’t do well. Eight in Colorado are currently not profitable, according to testimony by Alona Florenz, C&S senior vice president of corporate development.
2
Number of Albertsons stores that will be rebranded to Safeway by new owner C&S if the planned merger is successful. ETA: Unknown.
91
Safeway stores (including the two rebranded Albertsons) that will exist in Colorado post-merger. C&S has three years to change the name but it can be something like “Safeway by C&S” since Kroger will own the Safeway brand outside of Colorado.
18
Estimated number of months before the 14 Kroger-acquired Safeways are rebranded to King Soopers or City Market.
How long is this going to take?
TBD8
What are we waiting for?
Oct. 24
Closing arguments begin in Colorado vs. Kroger et al, the state’s antitrust case opposing the merger in front of Denver District Court Judge Andrew J. Luxen.
The unknown
A decision from U.S. District Court Judge Adrienne Nelson, who oversaw the FTC’s trial, which wrapped up Sept. 17
Related
A similar trial in Washington is expected to begin closing arguments on Oct. 23.
Footnotes:
- More than one-quarter of Albertsons’ shares are held by Cerberus Capital Management, a private-equity firm with a controversial history, such as its 2007 purchase of Chrysler that ended up in a government bailout two years later. The New York Times reported that Cerberus, which controlled Albertsons board, also forced the company to issue a $4 billion dividend before the merger closed and would require a $1.5 billion loan. That was delayed after Washington state sued, though a portion was paid. At trial, Albertsons executives said the dividend benefited all shareholders. ↩︎
- Kroger’s chief merchant and marketing officer Stuart W. Aitken said the company also plans to invest $1.3 billion in remodeling stores and another $1 billion in wages and training. On cross examination, Aitken said this wasn’t a binding term of the merger but they’ve done it before. ↩︎
- C&S is also using $500 million from its chairman and $400 million from Softbank Group Corp to pay Kroger, according to FTC case reported by The Los Angeles Times. ↩︎
- In the initial proposal in Sept. 2023, C&S agreed to pay $1.9 billion for 413 stores in 17 states plus D.C. Of those, 52 Albertsons and Safeways were in Colorado. Then the FTC and Colorado AG filed to block the merger in Feb. 2024 and the divestiture was revised. ↩︎
- Kroger executives acknowledged that there are eight City Markets in Colorado with little to no competition where prices have been raised with little impact to business. CEO Rodney McMullen said inflation, transportation and labor costs contribute to higher prices, though some may be due to the product companies charging Kroger more. ↩︎
- Announced on Oct. 14, 2022, Kroger and Albertsons estimated an “early 2024” closing date. ↩︎
- After regulators began questioning the merger, the stores extended the closing date in the “first half of Kroger’s fiscal 2024,” which ended Aug. 17. ↩︎
- After lawsuits from the FTC and Colorado Attorney General in February, Kroger no longer shares an estimated closing date. ↩︎