A union representing thousands of grocery store workers in Oregon, Washington, Idaho, and Wyoming has endorsed the proposed $24.6 billion merger between grocery chains Kroger and Albertsons.
The United Food and Commercial Workers Union Local 555, which represents more than 30,000 workers, some of whom are employees at Albertsons, Safeway, and Kroger-owned grocery banner Fred Meyer, among others, said on Monday that it supports the deal.
It’s the first known support from a union representing grocery workers in the country and contradicts the national UFCW’s outspoken opposition to the plan.
The Local 555 union noted that as part of the proposed deal, the union would require the companies to divest hundreds of stores and assets to C&S Wholesale Grocers, LLC, and many of those locations will be in Oregon, Idaho, and Southwest Washington.
Under the deal, C&S would buy 413 stores, eight warehouses, and two offices in an effort to ease antitrust concerns over the deal.
UFCW Local 555 Union President Dan Clay said in a prepared statement that a meeting with C&S revealed that “they understood and liked the grocery business but also recognized the importance of quality employees to their ongoing success.”
“C&S has the opportunity to bring a long-term strategy to a grocery industry focused on the short-term demands of shareholders and private equity investors,” Clay said. “Employees of Kroger and C&S will be better off than employees of other potential buyers whose actions never seem to match the image they project publically. In a refreshing change of pace, C&S seems poised to deliver a much needed fresh perspective for employees and customers alike.”
Miles Eshaia, a spokesperson for Local 555, said in a telephone interview with Supermarket News that the union anticipates that Cerberus Capital Management, which purchased Albertsons in 2005, plans to sell the grocer irrespective of whether it’s to Kroger or some other company.
Ann Poff, vice-president, UFCW Local 555 and a Safeway Employee, said in a press release that the union believes that Cerberus wants to find a buyer for Albertsons. A Cerberus spokesperson could not immediately be reached for comment.
When the proposed deal was announced in 2022, the investment firm stood to earn $5.2 billion for its shares, according to an analysis by Private Equity Wire.
“It’s foolish to think that stopping this merger means everything will stay the same,” Poff said in the press release. “Forcing Cerberus to continue to own Albertsons isn’t an option. If they don’t sell to Kroger, it will be someone else. Our members would rather work for people who run grocery stores over online or big-box retailers.
“This merger, combined with a significant divestiture to C&S, represents a good outcome for workers caught in the wake of a private equity company that wants to sell Albertsons.”
Eshaia told Supermarket News that supporting the merger is a practical concern for all parties involved. “They are an investment holding company, not a grocery company,” Eshaia said. “People are saying, ‘Stop the merger,’ but then what?”
Eshaia argued that the other big players who could be in line to buy a grocer of Albertsons’ size would be Walmart, Amazon, or possibly Target. Such an outcome would be bad for consumers, he said.
He added that divesting to C&S would mean maintaining collective bargaining agreements and pensions for workers under current union contracts. “You have to look at this practically,” he said. “What is the best possible outcome for workers and consumers?”
A spokesperson for the national UFCW could not immediately be reached for comment, but the union has consistently opposed the merger, arguing that it would be bad for workers and consumers.
Others have argued that the divestiture also has the potential for failure.
Kim Cordova, president of UFCW Local 7 in Colorado and Wyoming, argued in September that Albertsons’ divestiture of stores to Haggen in 2015 is an example of such a plan failing.
Albertsons divested 146 stores to Haggen during its acquisition of Safeway, but Haggen ultimately went out of business, and many of the locations were sold back to Albertsons at a discount.
Spokespeople at UFCW National, Albertsons, and Kroger could not immediately be reached for comment.