The two companies are scaling up the sale of grocery stores to get regulatory approval for their proposed $25 billion merger.
The Zhitong Finance App learned that Kroger (KR.US) and Albertsons (ACI.US) said on Monday that the two companies are expanding the scale of selling grocery stores and will sell 166 more stores to C&S Wholesale Grocers than previously agreed to obtain regulatory approval for their proposed $25 billion merger.
The two companies have been seeking to sell stores to address the growing concerns of regulators that the merger will lead to price increases, store closures, and job losses.
Under the new agreement, C&S will pay Kroger about $2.9 billion in cash, up from the previous $1.9 billion.
In addition to the 166 additional stores, the two companies have now sold 579 stores to C&S and allowed them to use their own Albertsons Signature and O Organics brands.
Kroger announced the acquisition of Albertsons in October 2022. In February of this year, the US Federal Trade Commission (FTC) and eight states sued to block the deal, saying it would raise food prices for millions of Americans.
Former FTC Chairman Maureen Ohlhausen said last week that the FTC is generally unwilling to accept asset divestment as a solution.
An Oregon district court has scheduled a hearing in August to review the FTC's preliminary injunction to block the deal. The merger deal will solidify Kroger's position as the second-largest company in the US grocery market after Walmart (WMT.US).
Steven Shemesh, an analyst at Royal Bank of Canada capital markets, said that one of the main reasons for opposing the initial sale plan was that C&S had no meaningful operating experience and that they had a history of selling retail assets.
“In our opinion, selling more stores won't change this view,” he said.
However, legal advisers familiar with the deal and divestment said Kroger and Albertsson are trying to provide C&S with a business that can operate effectively to support its business by increasing distribution capacity and creating a dense network of local stores.