Albertsons divestiture target said to be negotiating tactic with FTC for Kroger deal
Kroger (NYSE:KR) and Albertsons (NYSE:ACI) are said likely to end up divesting about 375 stores, close to the number of stores that the Spinco is capped out in the $25 billion deal.
The difference between the 375 stores for which the Spinco is capped at and the 650 total stores is said to be a negotiating tactic between the parties and the Federal Trade Commission, according to an Axios Pro report, which cited people familiar. The parties didn't want to potentially go through the lower number, possibly hastening a deal termination.
The companies likely set the whole store divestitures as "artificially" high to avoid a breakup fee and have an easier time arguing in court if it gets to that point, according to Axios.
Kroger announced that as part of the purchase, Albertsons (ACI) is prepared to establish an Albertsons spinoff (SpinCo) that would comprise between 100 and 375 stores that would need to be divested into a standalone company.
Kroger, when it announced the deal a month ago, said that it was confident it would pass regulatory scrutiny.
"We are confident from the extensive work that we've done that we believe we have a clear path to achieve regulatory approval with divestitures," Kroger Chief Financial Officer Gary Millerchip said on the conference call announcing the deal.
On Friday, a Washington state judge set Thursday for a preliminary injunction hearing on Albertsons (ACI) plan to pay a $4 billion dividend in conjunction with its planned sale to Kroger (KR).