Kroger to sell the Mariano’s brand as it prepares for merger

One of the major brand names in Chicago’s grocery landscape will change hands as giants Kroger and Albertsons shed stores in hopes of securing federal approval for their megamerger.

The companies announced Friday they would sell off more than 400 grocery stores, including 14 in Illinois, to C&S Grocery Wholesalers for $1.9 billion. The companies also said they would sell off the Mariano’s brand name as part of the deal.

The divestiture plan comes as the companies, which are the two largest traditional grocery operators in the country, attempt to secure Federal Trade Commission approval of their $24.6 billion merger, which they first proposed last October. Mariano’s parent Kroger is planning to acquire Jewel-Osco parent Albertsons.

In a statement, Mariano’s spokesperson Amanda Puck confirmed some Mariano’s stores would be sold off as a result of the divestiture plan.

“Because we are still in the regulatory process, we are not able to share the specific locations included in the agreement,” Puck said. She said C&S, a wholesaler that also operates Piggly Wiggly and Grand Union grocery stores, had agreed to honor all existing collective bargaining agreements.

Fourteen Kroger-owned grocery stores in Illinois are slated to be sold off. Kroger owns about 44 Mariano’s grocery stores in Illinois in addition to about 10 Food 4 Less stores.

Any Mariano’s stores that are retained by Kroger will be “re-bannered” into an existing Kroger or Albertsons brand after the deal closes, the companies said in a Securities and Exchange Commission filing.

Jon Hauptman, founder and president of retail consultancy Price Dimensions, said it is possible Kroger would choose to operate those Mariano’s stores under the Jewel-Osco banner, which remains a brand with strong name recognition in the Chicago area.

“There’s a good chance that we’ll just see more Jewels in the area,” he said.

Kroger and Albertsons will also sell off the QFC and Carrs brand names, as well as some distribution centers and private label brands.

Kroger said in an SEC filing that the deal, which is still subject to approval by the Federal Trade Commission, is on track to close in early 2024.

The company said Kroger may require C&S to buy up to 237 additional stores “in certain geographies” in order to secure FTC approval of the deal.

Hauptman said he would not be surprised to see additional divestitures in the Chicago area, where some Mariano’s and Jewel locations are located almost on top of one another.

“Fourteen seems sort of low,” he said.

Jewel has about 183 stores in Illinois and a handful in Indiana and Iowa.

Kroger and Albertsons first announced the proposed merger last October. In an earnings call Friday, Kroger CEO Rodney McMullen said the company had landed on C&S after a “robust and thoughtful diligence process” that included reviewing “dozens of buyers spanning from private to public to union to nonunion domestic and international players.”

Mariano’s was founded by Dominick’s executive Bob Mariano in 2010. Kroger bought the chain’s parent company, Milwaukee-based Roundy’s, for $800 million in 2015.