By Bill Peters
Supermarket chain says sale unrelated to proposed merger with Albertsons
Supermarket chain Kroger Co. agreed Monday to sell its specialty pharmacy business to CarelonRx, a subsidiary of Elevance Health (ELV), saying it would be better off as a standalone segment.
A Kroger (KR) representative said the sale was "unrelated" to its planned $24.6 billion merger with grocery chain Albertsons Cos. Inc.
That merger deal has faced increased scrutiny from regulators concerned about the size of the combined company and its potential impact on grocery prices and competition. Both chains want to sell their stores so that the deal is more acceptable.
Kroger shares fell 1.1% after hours.
Kroger's specialty pharmacy business serves patients with chronic illnesses and is separate from other Kroger pharmacies. Terms of the deal were not given, but Kroger said he did not expect the deal to have an effect on its full-year financial outlook. The sale is expected to close in the second half of the year.
"As part of our periodic asset review, it became clear that our strong specialty pharmacy business unit will best achieve its full potential outside of our business," Colleen Lindholz, president of Kroger Health, said in a statement.
"One of the most important considerations was continuity of operations to ensure minimal disruption to our associates and patients," he said. "We are confident that this transaction will help the business grow and deliver better outcomes for patients."
Last month, the Federal Trade Commission sued to block the merger between Kroger and Albertsons (ACI), claiming it would make food more expensive for shoppers after two years of higher prices. Kroger has claimed that the merger would actually lower prices.
Kroger and Albertsons have proposed selling several hundred stores and other properties to C&S Wholesale Grocers, the FTC noted. But the agency said the proposal was "inadequate" and "fell far from mitigating lost competition between Kroger and Albertsons."
The FTC said the combined company would have more than 5,000 stores and approximately 4,000 retail pharmacies.
-Bill Peters
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03-18-24 1905ET
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