At least 104 Kroger and Albertsons grocery stores in Washington would be sold to New Hampshire-based C&S Wholesale Grocers under a proposed merger of the two grocery giants, the companies announced Friday. 

That’s almost a third of Washington’s nearly 350 Kroger and Albertsons locations, which operate under the Safeway, Albertsons, QFC and Fred Meyer brands.

The 104 Washington stores on Friday’s list represent the largest share of the 413 locations Kroger and Albertsons have offered to divest in 17 states and Washington, D.C., as they seek regulatory approval for the $25 billion merger, announced in October.

Friday’s announcement brought some good news for shoppers and store staff alike: The $1.9 billion sale to C&S means no Kroger or Albertsons stores will close “as a result of the merger,” according to the companies’ statement.

What the two companies didn’t say, however, was almost as critical: where the 413 stores, including Washington’s 104, are located.

Retail experts don’t expect locations to be shared until Kroger and Albertsons are more certain of Federal Trade Commission approval, which they hope for sometime next year.

But if the deal goes ahead, most of the divested stores are likely to be in the Seattle area, which has nearly half of the state’s Kroger and Albertsons locations, including many that are located close to one another.

Regulators typically require merging companies to sell, or divest, locations that are close to one another in order to maintain competition in those markets.

“Seattle-Bellevue-Tacoma is going to have a lot of those 104 stores,” predicted Jarrad Harford, chair of the finance and business economics department at the University of Washington’s Foster School.

Mixed reactions

By Friday afternoon, news of the divestiture sale to C&S had drawn mixed reactions across the Seattle area. 

For some Kroger and Albertsons employees, assurances made Friday that C&S would honor existing union contracts, including health care, pension benefits and wages, eased some anxieties over yet another major consolidation in the Seattle-area grocery business.

“I’m not really worried about it,” said a staffer at the QFC in Seattle’s Wallingford neighborhood, over questions as to whether the location would remain with the merged companies or be sold to C&S.

“They haven’t really told us anything, other than we’re all going to be retained.” The worker asked not to be identified because they weren’t authorized to speak with the press.

Other reassuring details: Once the merger closes, Kroger says it will start investing $500 million “to reduce prices for customers in stores across the U.S.”

And, for Fred Meyer fans, the C&S sale won’t include any of the big-box retailer’s locations, according to QFC spokesperson Tiffany Sanders. (QFC and Fred Meyer are both owned by Kroger.)

Still, despite those promises, some workers and shoppers worry about a repeat of the last major grocery store tie-up.

They point to the Safeway-Albertsons merger in 2015, in which the companies agreed to sell 146 locations to Bellingham-based Haggen. But in less than a year, Haggen had filed for bankruptcy protection and ended up selling 29 of its “core” stores to Albertsons and closing several others in Washington.

“How do we know it’s not going to be a debacle like Haggen?” asked Seattle resident Jeff Silverman, of the proposed sale to C&S, a grocery wholesaler that also operates grocery retail chains Grand Union and Piggly Wiggly, in the Midwest and Southeast, respectively.

Even if C&S purchases a Seattle-area Safeway or Kroger store, “there’s no guarantee that Piggly Wiggly isn’t going to close it, and there’s no guarantee that Piggly Wiggly is going to do as good a job of running it as Safeway used to do,” Silverman said.

Officials with the United Food & Commercial Workers, which represents more than 100,000 Kroger and Albertsons workers, also warned of a Haggen-like outcome.

“Today’s announcement of a nearly identical divestiture scheme is a troubling sign that history could repeat itself,” according to a statement Friday by seven UFCW Local presidents, including Faye Guenther with UFCW Local 3000, which covers Washington, northeast Oregon and northern Idaho.

Deeper pockets

But some business experts say the current deal is far less vulnerable than the Haggen sale was. 

For starters, C&S is a much bigger player: Where Haggen had just 18 locations before trying to absorb 146 new stores, C&S is the country’s largest grocery wholesaler and has nearly nine times as many retail locations, along with annual revenues that Forbes estimated at $33 billion in 2022.

“What went wrong [with Haggen] was they didn’t have enough capital. They didn’t have the operational experience. They really didn’t have the balance sheet,” said Kevin Boeh, a mergers and acquisitions expert at the Foster School. C&S, by contrast, does have “the capital to do it.”

But experts have concerns, as well. The $1.9 billion sales price for the 413 stores, along with other facilities, was lower than many analysts had expected, said Arun Sundaram, a market analyst at CFRA Research who follows the grocery business. That could mean the divested locations are “slightly underperforming stores,” Sundaram said.

Some critics have warned that Albertsons and Safeway are only likely to divest unprofitable stores, which would be extra challenging for a buyer. 

The “good news,” said Sundaram, is that even if the divested stores lag a bit, “C&S has both the capital and experience necessary to successfully operate a grocery business.” 

Still, questions remain.

If federal regulators aren’t convinced that the sale of 416 stores satisfies anti-competition concerns, Friday’s announcement says C&S may end up buying an additional 237 Kroger and Albertson locations “in certain geographies.”

The announcement provides no indication where those might be. 

Attorney Doug Ross, an antitrust expert at the University of Washington School of Law, speculates that any extra sales would follow the same pattern as the 416 announced Friday, with many coming in Washington, which has roughly 10% of all Albertsons locations and 4% of all Kroger locations.

“It seems logical that additional divestitures would fall in the same proportion,” Ross said.

And the deal must still survive scrutiny by federal and state regulators.

Washington Attorney General Bob Ferguson, for example, tried unsuccessfully to prevent Albertsons from paying its investors a $4 billion dividend ahead of the merger. He also warned in January that the “merger is far from a done deal.” On Friday, Ferguson said his “priority is protecting competition, consumers, and workers in Washington. We will be reviewing [the deal] through that lens.” 

In the meantime, some shoppers were also uncomfortable with the lack of knowledge of whether their location would be changing hands or what changes might come under a new owner. 

“I think it would make me even less inclined to come here as often,” said Meghann Van Pelt, a regular at the Wallingford QFC, over the thought that the location might end up with C&S.

But Silverman thinks Kroger and Albertsons may benefit by not disclosing which locations they want to sell until the deal is closer to approval. 

“If I knew that it was going to be my store, you can imagine I’m going to be writing a letter to the attorney general,” Silverman says. 

But because the locations remain secret, “people are going to say, ‘Well, you know, it might be my store, but it might not be my store, so I’m not gonna write a letter … just yet.’ ”

Paul Roberts: proberts@seattletimes.com; on Twitter: @Pauledroberts.