FTC Delays Kroger’s $25 Billion Takeover of Albertsons Amidst Growing Uncertainty

The Federal Trade Commission (FTC) is expected to extend its decision on Kroger's proposed $25 billion takeover of Albertsons until February 2024, as reported by Axios. The delay follows a previously disclosed "timing agreement" between the parties, preventing any action on the merger proposal until January 17, 2024. An anonymous source close to the FTC revealed that the regulator might utilize the extra time to potentially prepare a lawsuit, suggesting dissatisfaction with the grocers' divestiture plan announced in September 2023.

The FTC's hesitation stems from over a year of intense scrutiny and negotiations, with recent disclosures indicating skepticism about the deal's merits. Despite Kroger's push for a mid-December 2023 decision, a promise was made not to close the deal before January 17, 2024. However, regulators sought to extend this deadline to continue discussions about the proposed concessions designed to address their concerns.

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Details about the ongoing discussions between the retailers and FTC regulators have surfaced in court filings related to a California lawsuit initiated by consumers seeking to halt the deal. The proposed merger's status has been further complicated by Kroger's insistence on closing the deal this spring, while the FTC insists on a more thorough review.

Kroger CEO Rodney McMullen expressed optimism during a November 30, 2023 conference call, emphasizing the company's cooperation with the FTC in addressing concerns. Despite filing for "certified substantial compliance" on November 15, 2023, indicating Kroger's response to the FTC's questions, legal experts caution that agreement may not be reached, potentially prolonging the review process.

The $25 billion proposal, announced in October 2022, would rank among the largest retail mergers in history, impacting nearly 5,000 Kroger and Albertsons stores and 700,000 workers, even before divestitures. Consumer and union groups have voiced opposition, citing concerns about competition, potential price hikes, and harm to workers. Kroger executives, however, have vowed to fight for the deal in court.

In September 2023, the company proposed a $2.3 billion plan to sell 413 stores to C&S Wholesale Grocers, aiming to address antitrust concerns. Despite this, the FTC remains uncertain about the deal's viability and whether the proposed divestitures are sufficient. Court records indicate ongoing discussions between Kroger and the FTC regarding a potential extension of the January 17, 2024 deadline, highlighting the complexity and uncertainty surrounding this high-stakes merger.

As the FTC continues its review, stakeholders anxiously await a decision that will shape the future of these retail giants and have far-reaching implications for the industry.