PESP applauds rejection of proposed merger between Kroger and Cerberus-owned Albertsons

Proposed deal would have hurt consumers, workers, say advocates

Yesterday, a federal judge blocked the $24.6 billion acquisition of grocery chain Albertsons by rival grocery Kroger, siding with the Federal Trade Commission in its argument that the merger would have reduced competition and raised prices for consumers. Initially announced in October 2022, the merger was widely derided by worker and consumer advocacy groups who argued that the merger was anti-competitive and anti-worker, and would be likely to burden consumers grappling with rising living costs.

Among those poised to benefit most from the merger was private equity firm Cerberus Capital Management, which stood to gain over $5 billion if the deal proceeded. Cerberus, which holds a 30% stake in Albertsons and wields significant influence over its board, was paid $1 billion as part of a controversial $4 billion dividend payout to investors shortly after the merger announcement in 2022. The dividend drained much of Albertsons’ liquidity and saddled the company with an additional $1.5 billion in debt.

“This is a win for consumers, a win for competition and a win for workers, said Justin Flores, Director of Labor and Jobs at the Private Equity Stakeholder Project. “From February 2020 to July 2024, grocery prices rose by 25.6%, a greater rate than overall inflation. Americans can’t afford less competition. This mega-merger would have spelled out lost jobs for workers, less bargaining power for unions, and higher prices for consumers.”

Cerberus Capital Management earned a failing grade on the Private Equity Labor Scorecard in November 2023 due in part to the many serious OSHA violations at its portfolio companies. Many of these serious violations – those in which workplace hazards could cause serious physical harm or death  – occurred at Albertsons.

“With this decision, Cerberus and Albertsons ought to redirect the time, energy, and resources spent on this mega-merger to improving conditions for the workers whose labor is essential to their bottom line,” Flores said.