Kroger CEO: Merger is not an ‘arm wrestle’ with rest of the industry

Kroger CEO Rodney McMullen believes the proposed merger with Albertsons will be good for the entire industry.

The grocery chief opened Groceryshop in Las Vegas talking about the $24.6 billion deal and Kroger’s increased investment with local businesses if the merger is approved.

“We don’t look at it as an arm wrestle,” McMullen told CNBC’s Melissa Repco. “We look at as how do we grow our combined businesses.

“So I just don't look at any of this as you lose, I win. To me, we have to figure out a way where we [all] win together.”

One criticism of the Kroger, Albertsons proposed merger is it could reflect the mistakes Albertsons made when it consolidated with Safeway. McMullen said that deal was used as an example.

“One of the things that we did was study the prior case in terms of what was criticized and why. And you had a situation where a company was highly levered,” he said.

“They went from like 15 stores to 150 stores or so with very little debt. They really didn’t have the management depth across the organization. They immediately had to change names and they raised prices and all of those things.”

McMullen hopes the selling of over 400 Kroger and Albertsons stores to C&S Wholesale Grocers will go a long way in convincing the Federal Trade Commission to approve the merger. He told Repco more than a dozen buyers were analyzed, some non-union players and some union players, but C&S checked all the boxes.

Related:What you think about: The Kroger, Albertsons, C&S deal

“It was really important to find somebody that had a strong balance sheet, had operated in the business, and understood the grocery business and had scale, had talent, and understood what they had,” he said.

Kroger announced on Tuesday that if the merger with Albertsons does clear both grocers will offer more shelf space to local product. The combined company will increase the number of local products in its stores by 10%, which equates to at least of 30 new local products in each store.

“It’s just one extension of something that’s really been important to Albertsons and really been important to us, is how do you identify local products that the customer is going to love but they may or may not know about,” said McMullen.