Nearly seven in ten likely 2022 voters in King County, home to the City of Seattle and most of its immediate suburbs, are opposed to Kroger’s purchase of fellow grocer Albertsons, a poll conducted last week for NPI has found.
68% of respondents surveyed for NPI by Change Research said they opposed the merger, while just 17% said they supported it. Nearly half (48%) said they were strongly opposed, while only 5% were strongly supportive.
Kroger has claimed that it will “invest” in lower prices for shoppers if the merger goes through, and the question posed to respondents explicitly mentioned this pledge, as well as explaining that the companies believe it will create “a premier seamless ecosystem across 48 states and the District of Columbia, providing customers with a best-in-class shopping experience.”
But respondents were unmoved.
Kroger and Albertsons are the number one and number two grocers by revenue in the United States, respectively, and own a significant percentage of the grocery stores in the Seattle market. They know that to win approval to combine, they’d have to divest stores, as was the case when Albertsons bought Safeway in 2015. However, Albertsons’ divestment of stores to locally based grocer Haggen was a failure, and Albertsons ended up buying some of those stores back.
That experience was cited by U.S. Senators Patty Murray and Maria Cantwell in a letter urging the FTC to review the proposed merger with a very critical eye.
“Together, the 337 Albertsons and Kroger grocery stores in Washington represent 21.5% of the state’s total,” the senators wrote on November 1st.
“Underserved communities throughout Washington benefit from these stores and what they provide in price competition, convenience, high-quality nutritional access, and pharmacy services,” the senators noted to the FTC’s Lina Khan. “Given their aggregate share of the state’s retail grocery sector, we fear that Washington is at disproportionate risk of losing stores as a result of the proposed merger.”
“Our most urgent concern is the announcement by Albertsons of a cash dividend of $6.85 per share, payable on November 14th, 2022, to its shareholders, only two years after the company went public,” the letter added. “This dividend of approximately $4 billion comprises nearly 20 percent of the value of the company — an extraordinary cash outlay that directly benefits the largest shareholders of Albertsons, who also control the board. This action appears to reflect a disregard for the wellbeing of the ongoing business should the merger not be completed.”
Attorney General Bob Ferguson, taking note of these plans to enrich Albertsons’ stockholders, went to court last week to block the payment of the dividend.
“Paying out $4 billion before regulators can do their job and review the proposed merger will weaken Albertsons’ ability to continue business operations and compete,” Ferguson declared. “Free enterprise is built on companies competing, and that competition benefits consumers. Corporations proposing a merger cannot sabotage their ability to compete while that merger is under review.”
King County Superior Court Judge Ken Schubert agreed to hit pause on Albertsons’ plans and issued a Temporary Restraining Order halting the payment of the dividend until the matter is further litigated and adjudicated. The temporary restraining order is in effect until at least this Thursday.
The attorneys general of California, Illinois, and D.C. filed their own lawsuit in federal court in the District of Columbia to stop the dividend.
Albertsons grumbled about both lawsuits in a press release, arguing that the lawsuits “are meritless and provide no legal basis for canceling or postponing a dividend that has been duly and unanimously approved by Albertsons Cos.’ fully informed Board of Directors.” Of course, as Senators Murray and Cantwell mentioned, that “fully informed Board of Directors” also happens to consist of representatives of Albertsons’ biggest shareholders who would get the dividend.
While Albertsons was losing last week in court, our poll was completing fielding, and as we can see, Albertsons (and Kroger) are also losing in the court of public opinion. Our research shows that King County voters don’t want this merger to go through, potentially resulting in store closures and job losses.
UFCW Local 3000, which represents unionized workers at Kroger and Albertsons, strongly opposes the acquisition. We mentioned their opposition in our question.
“The proposed merger of these two grocery giants is devastating for workers and consumers alike and must be stopped,” Faye Guenther, president of UFCW 3000, said. “Just as our UFCW workers stood together to negotiate landmark new contracts with both Kroger and Albertsons/Safeway within the last year across the western U.S., we will stand united to fight for access to nutritious food, a safe shopping experience, and investments in good jobs in our communities.”
Voters in King County agree.
Here’s the full text of the question we asked and the responses we received:
QUESTION: Kroger, which owns Fred Meyer and QFC, recently announced plans to acquire Albertsons, which owns Safeway. Kroger is the nation’s largest grocer by revenue and Albertsons is the second largest. In Seattle and King County, Kroger and Albertsons are each other’s biggest local competitor. The two companies say their proposed merger “creates a premier seamless ecosystem across 48 states and the District of Columbia, providing customers with a best-in-class shopping experience across both stores and digital channels” and Kroger has stated it “plans to invest in lowering prices for customers.” Merger skeptics and opponents, including Attorney General Bob Ferguson and UFCW 3000, say the deal could be a disaster for shoppers and workers, especially because the companies might be required by the federal government to sell some of their stores to another owner that might struggle to keep them open. Do you support or oppose the proposed Kroger-Albertsons merger?
ANSWERS:
- Support the merger: 17%
- Strongly support: 5%
- Somewhat support: 12%
- Oppose the merger: 68%
- Somewhat oppose: 20%
- Strongly oppose: 48%
- Not sure: 14%
Our survey of 740 likely 2022 King County general election voters was in the field from Friday, October 28th until today, Thursday, November 3rd.
The poll was conducted entirely online for the Northwest Progressive Institute by Change Research and has a modeled margin of error of 4.0%.
We sought in our question to present both Kroger and Albertsons’ arguments in support of the merger from a shopper’s point of view along with UFCW Local 3000 and AG Bob Ferguson’s arguments against it. The arguments against won, and by a lot. Fewer than one in five voters likes this proposed merger.
Big companies like Kroger have a long record of making promises that they don’t keep when they want permission to buy up a competitor. Research has shown that mergers don’t usually return any value to shareholders. Yet they are attractive to CEOs obsessed with empire building and lucrative for investment banks and law firms, which is why companies keep trying to do them.
NPI has called on the federal government to take action to thwart this proposed merger. The research we are publishing today clearly demonstrates that’s what people living in Washington State’s largest county want too.
