Albertsons Give Away – Angry Bear

Follow the stories below about Albertsons and Kroger give away of following the money . . .

In 2022; Albertsons is set to give away a third of its value to its private equity owner Cerberus and to other investors. The publicly traded supermarket chain Albertsons will pay a $4 billion special dividend in early November.

That will occur if the SEC or other regulators do not intervene in the merger.

The give-away dividend equals about a third of Albertson’s market value. Approximately seventy percent of the windfall dividend will end up with Albertson’s former private equity owners and Apollo Global Management. The Apollo has a minority share in Albertsons. The results of this give-away will be a spectacular windfall for Cerberus, enriching the PE firm and its owners, and putting the future of the Albertsons chain and store workers at risk.

While Cerberus and Apollo gains, the payment of the dividend places Albertson’s at risk of financial failure. The payout of $4 billion could bankrupt the already debt-ridden supermarket chain. To date, the general view is the FTC and the courts will not allow the merger.

And if the dividend is paid-out and causes Albertsons to fail? It provides Kroger with a “failing firm” defense for its merger proposal. Kroger could argue Albertsons will face failure if the merger does not take place.

A merger would be bad news for workers, shoppers and Albertsons. The newly formed behemoth Kroger supermarket chain could set payment to its suppliers, prices to its customers, and close stores. 

Consider increasing food prices which are already high and decreasing wages for worker to result.

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Kroger and Albertsons sell hundreds of stores

The Federal Trade Commission has sued to block the $24.6 billion acquisition of Albertsons by rival grocer Kroger, alleging the deal would harm American consumers already facing high grocery bills.

The FTC says the deal — the largest proposed supermarket merger in U.S. history — would hurt competition and lead to high prices for groceries and other household items for millions of Americans. The regulator also argues the deal would “immediately rease” competition for thousands of grocery store workers and make it more difficult to secure better wages and benefits. Henry Liu, the director of the FTC’s Bureau of Competition, said in a statement.

“This supermarket mega merger comes as American consumers have seen the cost of groceries rise steadily over the past few years. Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today.”

Earlier this month, the attorneys general of Washington state and Colorado sued to block the merger. The deal has also been heavily criticized by several lawmakers, including Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.).

Kroger and Albertsons argue that the deal won’t hurt competition, but will allow Kroger to better compete with Walmart, which owns 22{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} of the U.S. grocery market and is the largest player in the industry. If combined, Kroger and Albertsons would make up 13{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} of U.S. grocery sales and reach 85 million households across the nation. The companies would employ almost 700,000 employees at more than 5,000 stores and some 4,000 pharmacies in the U.S.

In September, as part of plans to make the acquisition more palatable for regulators, the companies  announced the sale of 413 stores and eight distribution centers to C&S Wholesale Grocers, the company behind Piggly Wiggly and Grand Union. Kroger has also pledged to invest $500 million in reducing prices.

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Pursuant to 16 C.F.R. § 3.38(a), Complaint Counsel move for an order compelling Respondents The Kroger Company (“Kroger”) and Albertsons Companies, Inc. (“Albertsons”) to search for and produce text messages and handwritten notes responsive to Complaint Counsel’s Requests for Productions (“RFPs”) from each of their employees who appears on either side’s preliminary witness list (the “Preliminary Witnesses”) through April 22, 2024, when the second divestiture agreement was executed. Despite producing such materials during the investigation, both Respondents now refuse. These messages are highly probative of the issues in this case. or example, Respondents’ employees regularly use text messages to share photographs taken during visits to each other’s stores and ideas for competitive responses.

Albertsons’ refusal is particularly concerning because at least two Albertsons senior executives deleted work-related text messages for nearly a year after Albertsons was obligated to retain documents. Responses to the missing texts suggest that some questioned the assertions Kroger now makes about consumer benefits from the merger.

As for handwritten notes, during the pre-complaint investigation, Kroger produced hundreds of pages of annotated hard copy documents from meetings Kroger’s Chief Merchant and Marketing Officer Stuart Aitken attended relating to the proposed merger. Mr. Aitken is on both sides’ preliminary witness list, but Kroger is refusing to produce any more handwritten notes from him or any other witnesses. Mr. Aitkens’ notes on due diligence, indicating that Albertsons is already doing “all the right things” to reduce costs and lower prices, undercut Kroger’s claim that the merger is necessary to improve Albertsons’ pricing. Complaint Counsel is entitled to further production of notes to evaluate Respondents’ arguments about the proposed merger and divestiture.

I. Respondents’ Executives Created Relevant Texts and Handwritten Notes about Their Merger and Its Effects.
During the pre-complaint investigation, Respondents produced text messages and handwritten notes from numerous custodians, including the Preliminary Witnesses, for the period January 1, 2020 through May 23, 2023, or August 25, 2023, depending on the custodian.

The investigation established that Respondents employees use text messages regularly. Both produced text messages from numerous Preliminary Witnesses, and Kroger CEO Rodney McMullen testified that { blank}. Ex. F (McMullen Tr.) 65:24-66:17.

Respondents also produced handwritten notes during the investigation. For example, Mr.
Aitken’s documents included a 406-page collection of documents from the period shortly before
the merger agreement was signed with handwritten notes, an excerpt of which is attached as
Exhibit G. In evaluating { } Id. at 6.

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Matt Stoller brings us up to date on the Albertson’s Kroger merger . . .

After two years of investigations and negotiations over court logistics, next week, the Federal trial for the $24 billion Kroger-Albertsons supermarket merger begins. And this one’s really bitter, with new revelations emerging a few days ago from the Federal Trade Commission that a group of Albertsons executives, including CEO Vivek Sankaran, have been deleting text messages relevant to the trial that the court ordered them to preserve. That’s a big legal no-no. Meanwhile, Kroger launched a lawsuit against the FTC, seeking to have the commission deemed unconstitutional.

It’s getting ugly, so let’s dive in.

I’ve written about this merger several times. It matters for a number of reasons. First, it’s a very large and important set of supermarkets who control our food systems.

Kroger and Albertsons are both monsters, and the two of them combining would create the second largest chain in the country, after Walmart, with 15{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} of the national grocery business. Kroger/Albertsons would employ over 700,000 people, have over $200 billion in revenue and more than 40,000 private label brands, and own and operate brands such as Safeway, Ralphs, Smith’s, Harris Teeter, Dillons, Fred Meyer, Vons, Kings, Haggen, Tom Thumb, Star Market, Jewel-Osco, and Shaw’s.

The merger is happening across the backdrop of consolidation in the industry. “There are already 30{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} fewer grocery stores than there were a few decades ago,” which impacts pricing, and large chains “not only secure better prices for goods than their smaller counterparts, but can also increase prices faster than costs, contributing to inflation.” This merger will worsen the situation, as “suppliers, consumers, and workers will all feel the pressure from Kroger/Albertsons, and since suppliers buy from farmers, farmers will feel it too, at least indirectly.”

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Along with Matt Stoller, Angry Bear has been following the Albertson Kroger merger. What this merger does is combine two large (although not the largest) players i the grocery buz. With Albertson selling off a portion of the business to a private equity owner Cerberus to satisfy debt, it puts Albertson’s in a precarious situation. A merger would theoretically bail out Albertson’s.

What gets slimy about the whole affair is Albertsons and Kroger plotting Albertson’s demise thereby allowing Kroger to appear as a white knight bailing out Albertsons debt. A lot of surmising going on here.

What gives the surmising a foundation are the notes which were shown to the FTC investigators in the beginning, the court telling both Kroger and Albertsons not to destroy the notes, two Albertson execs destroying notes, and both companies refusing to give up the notes the FTC saw.

More to come. ‘Seismic shift.’ Kroger’s fight against a federal agency could upend antitrust, msn.com. Follow the notes above.