The Kroger-Albertsons merger ended in a somewhat surprising development last week when Albertsons, seemingly unhappy with a lack of progress, terminated the merger from their end and, shortly after, announced plans to sue their proposed partner. As part of the merger, Kroger and Albertsons had to create a list of stores to divest to present to the FTC. This list included 26 stores in Texas. A mix of Tom Thumb, Albertsons, United, and Randalls locations, the stores were to be taken over by C&S Wholesale Grocers in a plan never made fully public. The proposed merger left many questions open, such as whether the stores in Texas would continue to use their legacy names or would be converted to another banner. C&S, which owns a few brands, got permission to use Albertson’s name, brands, and likeness in some areas, but it was never revealed if this included Texas.
So, what’s the next move for Albertsons?
To quote myself from earlier in the year, “Well, Dude, we just don’t know.” We can, however, offer some speculation. Texas has been C&S territory for about ten years now since they purchased Grocers Supply. However, C&S does not operate any significant retail presence, with only 11 Grand Union stores and one pharmacy counter in New England making up the majority of their direct retail presence. The merger promised to create new companies to operate the divested stores using Albertson’s personnel and backing. The company would be called 1918 Winter Street Partners and was created earlier this year to “hold” the stores in preparation for the merger. Two Houston-are Randalls stores, 14610 Memorial Dr, Houston, TX 77079, and 2931 Central City Blvd, Galveston, TX 77551 (both of which have been featured on HHR), were slated to be transferred over, but that no longer looks so sure. With a lack of directly owned retail, a much more likely outcome would be C&S trying to find independent operators to run these stores. C&S is the owner and licensor of the Piggly Wiggly brand, but chances are if the stores are divested, a larger operator, like Food Town, will need to step up to operate these stores. C&S’s efforts to bring the Pig back to Texas have seemingly stalled out, with one of the three stores that opened in 2023 closing last summer. The current outcome is likely for Albertsons to retain the stores, although investors unhappy with the aborted merger will likely want change, which may involve selling or possibly closing stores.
This would have probably resulted in many Randall’s locations getting the axe, as Kroger would have viewed them as inferior to their own stores. Many Randall’s were extremely close to existing Krogers, and I don’t think Kroger would have given any of their own stores the axe.