King Soopers’ parent company Kroger and Albertsons to move forward with $25 billion merger

Kroger — the parent company of King Soopers, the state’s largest grocery store chain headquartered in Denver — will merge with Albertsons in a move that will impact two of Colorado’s well-known retailers.

The Friday announcement joins King Soopers and Safeway, which operates under Albertsons Companies Inc. Kroger, headquartered in Cincinnati, Ohio, and Albertsons, based in Boise, Idaho, are both industry heavyweights, qualifying as two of the nation’s largest supermarket companies.

Kroger will acquire Albertsons for almost $25 billion. The merger agreement was unanimously approved by each company’s board of directors, according to a news release.

Fearing a grocery monopoly, opponents of the merger are already calling on antitrust enforcers to look into — and potentially block — the deal.

Walmart, Kroger, Albertsons and Target sit at the top of the grocery market pyramid, with Kroger ranking as the largest traditional grocery retailer and Walmart operating as the largest U.S. retailer of grocery products, according to the Agriculture Department. The agency called Kroger “a major player in mergers-and-acquisitions activity.”

Combined, Kroger and Albertsons employ more than 710,000, with almost 5,000 stores across 48 states and Washington, D.C. The merged company would serve a customer base of 85 million households.

The news also comes at a time when consumers are paying more for their groceries. Cereal, bakery and dairy products all jumped about 16% over the past year, according to latest Consumer Price Index Summary by the Bureau of Labor Statistics. Meat, poultry, fish and eggs also spiked 9%.

With its roots in Colorado, King Soopers & City Market operates as the state’s largest, full-service retail grocery chain. City Market launched in 1925, while King Soopers was first established in 1947.

Kroger operates 148 stores – including King Soopers locations – with around 22,000 associates in Colorado. King Soopers ranks as the state’s third-largest employer. Safeway manages 103 locations in the Centennial State.

Kroger held almost 34% of the Denver area’s grocery market share last year, with Walmart at almost 17% and Safeway at 11%, according to a report by Axios Denver. A spokesperson for Walmart, a major competitor in the grocery industry, declined to comment Friday.

“We are bringing together two purpose-driven organizations to deliver superior value to customers, associates, communities and shareholders,” said Rodney McMullen, Kroger chairman and CEO, who plans to serve in the same roles at the combined company. “Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores.”

However, many aren’t pleased with the announcement. Greg Ferrara, president and CEO of the National Grocers Association, said the merger “would not only put smaller competitors at an unfair disadvantage, but also increase anticompetitive buyer power over grocery suppliers, which ultimately would harm consumers.”

The U.S. is home to 21,000 independent grocers – many operating as family or employee-owned retailers – as of last year, according to the trade association. They produce $131 billion in sales and create 944,000 jobs.

Independent grocers are now facing threats, as “large, national chains increasingly control the grocery sector,” the National Grocers Association reports.

Dozens of mom-and-pop grocers cater to Mile High City residents, such as Sun Market at 2201 Lafayette St., Pacific Mercantile Company at 1925 Lawrence St. and Decatur Fresh at 995 Decatur St.

Both the Denver Metro Chamber of Commerce and the Colorado Chamber of Commerce declined to comment on the merger.

The National Grocers Association expects “this deal will receive rigorous scrutiny from federal antitrust enforcers.”

“A merger of the nation’s top two grocery chains should raise serious questions about a single supermarket giant gaining unprecedented dominance over the nation’s food supply chain,” Ferrara said.

Kim Cordova, president of the United Food and Commercial Workers Union Local 7 – which represents 17,500 members in Wyoming and mostly Colorado – described the merger as “devastating for workers and consumers alike and must be stopped.”

The overarching United Food and Commercial Workers International Union represents 1.3 million workers in grocery stores, meatpacking plants and other North American industries. Its president, Marc Perrone, said the merger “has serious implications for hundreds of thousands of our UFCW members and America’s families who are more concerned than ever about inflation’s impact on the price of their food and groceries, prescription drugs, and gas.”

The union is discussing it, and “will oppose any merger that threatens the jobs of America’s essential workers, union and non-union, and undermines our communities.”

The American Economic Liberties Project, a nonprofit that backs antitrust regulation enforcement, pushed against the idea.

“There is no reason to allow two of the biggest supermarket chains in the country to merge — especially with food prices already soaring,” said Executive Director Sarah Miller. “With 60% of grocery sales concentrated among just five national chains, a Kroger-Albertons deal would squeeze consumers already struggling to afford food, crush workers fighting for fair wages, and destroy independent, community stores.”

She called the merger “a cut and dry case of monopoly power.”