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Kroger CEO is ready to fight hard for merger approval
Grocery boss says a legal team was assembled long ago with the purpose of clearing the deal
3 Min Read
Kroger CEO Rodney McMullen says the company's legal team has been warming up for quite some time.
In a recent interview with Bloomberg, McMullen said lawyers were assembled way out in front of the $24.6 billion merger announcement with Albertsons. He said the team is ready to do whatever it takes to sway any judge if the Federal Trade Commission (FTC) blocks the deal, even if the fight takes months.
Kroger and Boise, Idaho-based Albertsons continue to work with the FTC over the merger, and McMullen said everything is on schedule. The grocery chief also believes the best professional advisors are being used and told Bloomberg when it is all said and done a Kroger, Albertsons partnership would create a healthy environment with lower prices. He also said he believes the store divestitures will go smoothly. McMullen said there are a handful of potential buyers who could take on the purchase without much debt. It is not clear whether the entire lot of divested stores, which could be as many as 650, would be sold to one buyer or to multiple companies.
Recently the United Food and Commercial Workers International Union (UFCW) voted to reject the Kroger, Albertsons merger.
“Given the lack of transparency, and the impact a merger between two of the largest supermarket companies could have on essential workers – and the communities and customers they serve – the UFCW stands united in its opposition to the proposed Kroger and Albertsons merger,” said UFCW International President Marc Perrone.
Shortly after the vote, McMullen and Albertsons CEO Vivek Sankaran released a joint op-ed in the Cincinnati Inquirer answering three common myths, with two of them dealing with store closings as part of the merger agreement and the impact to unions.
The Economic Policy Institute recently released a policy memo claiming that workers at all grocery workers, not just those at Kroger and Albertsons, could lose a total of over $330 million annually if the deal goes through.
The institute used grocery store employment and earnings data at specific Kroger and Albertsons stores to draw up the following findings:
The merger will lower wages for 746,000 grocery store workers in over 50 metropolitan areas of the U.S. Increased concentration will suppress wages for all grocery store workers in affected cities—not only those workers currently employed by Kroger or Albertsons
The total annual earnings of grocery store workers will fall by $334 million in affected metropolitan areas
Because Kroger and Albertsons employ about one quarter of all grocery store employees, most of the wage losses caused by the merger will be a negative externality that falls on grocery store workers employed by other firms. On average, all grocery workers in affected markets will lose about $450 per year in wage income
Earnings losses will be smaller in areas with a stronger union presence or a tighter labor market. In areas with weaker worker bargaining power, workers will experience larger wage declines
The expected earnings losses are a pure windfall for the employers. In the analysis, wages fall solely because of a change in labor market power brought about by increased concentration. Quantitatively, this windfall represents a significant transfer of income from wages to profits: The decrease in wages is equivalent to 2% of Kroger and Albertsons’ profits or three times the companies’ CEO compensation
“We have and will continue to engage constructively with the UFCW regarding the merger benefits and our divestiture plan, which includes no store closures or frontline associate layoffs as a result of the transaction. The merger is a win for our associates, customers and communities,” Kroger said in an email statement to SN. “The only parties who would benefit if this merger is not completed are large, non-unionized competitors such as Walmart and Amazon.”
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