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Bloomberg reports that "C&S Wholesale Grocers - with backing from SoftBank Group Corp. - is in talks to buy grocery stores that Kroger Co. and Albertsons Cos. are selling to win regulatory approval for their $25 billion merger, according to people familiar with the matter.

"C&S … could announce a deal as soon as this week to acquire most or all of the stores they are unloading for antitrust reasons, said the people, asking not to be identified because the matter isn’t public. The companies said in October that they would spin off 100 to 375 stores if they couldn’t find buyers for them."

Kroger is looking to buy Albertsons in a deal valued at $24.6 billion.  The deal is being scrutinized by the Federal Trade Commission (FTC) on antitrust grounds;  Kroger and Albertsons say that a merger is necessary to give them the scale to compete with Walmart, but the FTC could decide that a merger actually would be anti-competitive within the context of the rest of the market.

"It’s not clear how many stores C&S is acquiring or how much it is paying for them."

KC's View:

It also isn't clear whether C&S - a company that is both retailer and wholesaler - would operate these stores on its own (as it does Grand Union and Piggly Wiggly) or would spin them off to some of the smaller retailers that make up its 7500-unit customer base.

Though it is clear to me that C&S is capable of doing both.  Maybe it'll be a combination of the two approaches.

The real challenge, it seems to me, won't be in making the deal and writing the check.  The real C&S challenge will be making sure that whatever stores it buys are able to compete and differentiate themselves in a consolidating marketplace.