Failure of Kroger-Albertsons merger may lead to layoffs, store closures, CEO says

Vivek Sankaran, CEO of Abertsons Cos. Inc., testified in Denver District Court Wednesday that his company might have to consider cutbacks if its merger with Kroger doesn’t go through. The Colorado Attorney General’s Office has sued to block the merger. If the merger with Kroger doesn’t go through, the CEO of Albertsons Cos. Inc. said in court Wednesday that his company might have to consider layoffs and leave certain markets to remain competitive and financially secure in the long term.

“We can do many things to improve the company, but at some point the ability to compete with the Amazons and Costcos and Walmarts of the world, you just need added scale. We knew we wouldn’t be able to get that by ourselves,” Sankaran said. A trial is underway in the lawsuit by Attorney General Bob Ferguson of Washington state, whose complaints against the merger are similar to Colorado’s.

Sankaran said data on where customers in Colorado shop shows that for every $1 spent on groceries, Albertsons reaps 14 cents. Kroger takes in 16 cents and Amazon gets about 5 cents. Walmart captures the biggest share: 20 cents on the dollar. The rest of the money goes to a variety of entities, including Whole Foods and Trader Joe’s.

Davidson said C&S won’t have enough people or a strong enough retail infrastructure to successfully run all the stores it plans to acquire. Kroger and Albertsons have said that stores won’t close, people won’t lose their jobs and wages will increase if the merger goes through. Prices will drop because Kroger’s prices are 10% to 12% lower than Albertsons’ prices, the companies have said.

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