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Seeking to blunt criticism that their nearly $25 billion merger to create a grocery behemoth would stifle competition, Kroger<\/a> Co. and Albertsons<\/a> Cos. agreed to sell some of their stores to a little-known wholesaler.\u00a0<\/p>\n C&S Wholesale Grocers would buy 413 supermarkets in 17 states for $1.9 billion, creating what Kroger Chief Executive Officer Rodney McMullen called a \u201cfierce competitor\u201d and ensuring no stores would close as a result of the merger.<\/p>\n It\u2019s an unusual move for a 106-year-old company that isn\u2019t known for its retail operations, but Chairman Rick Cohen has long worked to expand the reach of Keene, New Hampshire-based C&S. Cohen, 71, joined his father at the family business in 1974 and grew it into one of the largest grocery wholesalers in the US, building a $21 billion fortune along the way, according to the Bloomberg Billionaires Index.\u00a0<\/p>\n While the closely held company supplies more than 7,500 supermarkets, big box chains and military bases, it operates just 23 supermarkets nationwide. The deal would quickly make C&S into a major retail player.<\/p>\n The only problem? The US Federal Trade Commission isn\u2019t buying it. \u00a0<\/p>\n The FTC, along with eight states and the District of Columbia, sued on Monday to block the supermarket merger. In its complaint, the commission called the stores C&S agreed to buy a \u201cpatchwork of assets cobbled together by Kroger\u2019s antitrust lawyers.\u201d\u00a0<\/p>\n C&S will struggle to turn the stores into a viable business because the deal doesn\u2019t include things like manufacturing capability vital for private label offerings, pharmacy products and information technology, according to the complaint.\u00a0<\/p>\n The company \u201cis deeply committed to our transformation strategy,\u201d which involves \u201cthe expansion of our retail footprint,\u201d Lauren La Bruno, a C&S spokesperson, said in an emailed statement. \u201cThe purchase of these stores will enable C&S to be one of the leading grocery retailers in the United States.\u201d<\/p>\n Cohen didn\u2019t immediately reply to a request for comment.<\/p>\n A separate complaint filed by Washington state said that C&S has a history of acquiring and then quickly divesting assets. In 2000, it bought 185 Grand Union supermarkets but sold more than 140 within a year, and many \u201cultimately closed,\u201d according to the complaint.<\/p>\n The FTC also raised concerns about whether stores might be shuttered after the sale, citing emails between C&S\u2019s then-CEO, Bob Palmer, and incoming CEO Eric Winn about the wording of a draft press release last year.\u00a0<\/p>\n \u201cDo we have to say that we won\u2019t close stores? (the \u2018all\u2019 is a problem),\u201d according to the email, which was released by the FTC. \u201cThe trick is that they stay open as they transition but then what? Are we committed to this?\u201d<\/p>\n C&S also has a history of closing unionized facilities and shifting operations to non-union locations, Washington state said in its filing.\u00a0<\/p>\n Cohen\u2019s dealings with organized labor go back to soon after he joined the family business, when the company was almost shuttered by a three-week strike at its then-headquarters in Worcester, Massachusetts. That led to Cohen\u00a0convincing his father to move<\/a>\u00a0the business to Brattleboro, Vermont, where it could hire nonunion workers, Bloomberg reported in 2013.\u00a0<\/p>\n C&S has \u201ca strong track record of successfully transitioning union employees and their associated collective bargaining agreements,\u201d La Bruno said.\u00a0<\/strong><\/em><\/p>\n Regardless of how the merger turns out, Cohen\u2019s fortune is largely insulated. The bulk of his wealth is now in warehouse automation specialist Symbotic Inc., which he founded in 2006.\u00a0<\/p>\n Initially created to improve efficiency at C&S warehouses by using robots, Symbotic became so important to Cohen that he left his CEO role at the grocery wholesaler in 2017 to run the company.\u00a0<\/p>\n The move paid off. Symbotic went public via a merger with a special purpose acquisition company in 2022. Revenue increased to $1.3 billion last year from $252 million in 2021, and its stock is up about 300% from the merger price.<\/p>\n Cohen and his family continue to own 70% of the $23.2 billion company, even after selling shares worth nearly $200 million this month.\u00a0<\/p>\n By comparison, C&S is worth about $4.8 billion, according to the Bloomberg wealth index. Revenue at the wholesaler has declined by 20% over the past six years to $21.7 billion, according to Moody\u2019s.<\/p>\n Symbotic\u2019s customers include grocery giants like Albertsons, Walmart<\/a> Inc. and Target<\/a> Corp. Walmart owns about 13% of the company, meaning that if the merger closes, one of Cohen\u2019s biggest competitors in groceries would also be a key customer and owner in his other, more valuable business.\u00a0<\/p>\n<\/div>\n\nLabor History<\/h3>\n
Warehouse Robots<\/h3>\n
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