Kroger, Albertsons plan to offload over 400 stores for close to $2 billion-sources

By Anirban Sen and Abigail Summerville

(Reuters) – Kroger (NYSE:) Co and Albertsons Cos Inc are nearing a deal they hope will secure U.S. regulatory clearance for their proposed $24.5 billion merger, by selling more than 400 grocery stores to C&S Wholesale Grocers for nearly $2 billion, according to people familiar with the matter.

The deal would give privately held C&S, primarily a supplier rather than an operator of grocery stores, a much more significant footprint. It currently operates about two dozen stores under the Grand Union and Piggly Wiggly brands.

SoftBank (TYO:) Group Corp, the Japanese investment group, is in talks with C&S about helping finance a small portion of the deal, one of the sources said.

While SoftBank typically opts for technology-related deals, it has ties to C&S executive chairman Rick Cohen, because it has a joint venture with warehouse automation company Symbotic Inc, where Cohen serves as CEO.

The stores that Kroger and Albertsons plan to shed are primarily in the Pacific Northwest and the Mountain states, along with some in California, Texas, Illinois, and the East Coast, the sources said.

An agreement may be reached as early as this week, they said, adding it remained unclear whether it will allay regulators’ fears that a combined Kroger and Albertsons would have too much control over grocery prices.

The sources requested anonymity because the negotiations are confidential. Kroger and Albertsons declined to comment. C&S and SoftBank did not respond to requests for comment. Bloomberg News reported about the talks between C&S, Kroger and Albertsons on Monday, as well as SoftBank’s involvement but gave no information about the deal terms.

Previously, Kroger and Albertsons said they may divest between 100 and 375 stores by placing them in a new company that Albertsons shareholders would own. In a regulatory filing Kroger said the upper limit for divestitures was 650 stores.

C&S has been looking to build its own store presence in a fiercely competitive market for supplying groceries. It lost one of its largest customers when Ahold Delhaize decided to transition to self-distribution in 2019.