It appears that Stop & Shop’s long-anticipated acquisition of King Kullen will be completed by the end of the month, according to a memorandum issued by the Bethpage, NY-based regional grocery chain.
It’s been a long climb for both parties to complete a deal that was first announced on January 4, 2019. The primary reason for the long delay was apparently due to the role of the Federal Trade Commission (FTC), which reportedly wanted Stop & Shop to divest more King Kullen stores from the original 37-store batch than Stop & Shop had originally hoped, due to what the FTC believed were anti-competitive store overlaps. At presstime, there was no official word on what the final store divestiture number will be.
Stop & Shop is currently the share of market leader in Nassau and Suffolk Counties with 51 stores and a market share of 19.88 percent. King Kullen now operates 35 supermarkets – 30 conventional supermarkets and five Wild By Nature natural and organic units (two King Kullen units have closed since the deal was initially announced) – and garnered a market share of 6.22 percent, according to Food Trade News’ data, making the family-owned company the fifth largest food retailer on “The Island.” Stop & Shop is also in the midst of a $150 million remodeling initiative to upgrade its Long Island stores. Also included in the original deal was King Kullen’s corporate headquarters on Central Avenue in Bethpage.
When the deal was originally announced 15 months ago, company co-CEO Brian Cullen (his cousin Donald Kennedy shares chief executive duties with him) said: “In 1930, Michael J. Cullen opened the first King Kullen and ushered in the era of the great American supermarket. As a family-owned and operated business, we are very proud of our heritage and extremely grateful to all of our associates and customers for their support over the years. We are confident the Stop & Shop brand will carry on our legacy of service in the region.”
The company’s internal memo, which was issued on April 17, referenced a prior memo from March 13, stated: “In our memorandum to you dated March 13, 2020 we advised you that the merger agreement between King Kullen and Stop and Shop had been extended to April 17, 2020 in order to resolve some outstanding issues which would allow us to complete the FTC approval process.
“Those issues have been largely resolved, and now final negotiations with the FTC toward completion of the approval process have begun. At the same time, however, the COVID-19 pandemic has had a substantial impact on supermarket operations in our region, raising issues that need to be considered carefully between Stop & Shop and King Kullen so that we can complete this merger successfully. Accordingly, the parties have agreed to amend, and have amended, the merger agreement to call for an outside completion date of April 30, 2020. This additional time will give representatives of both parties the opportunity to meet and begin to develop and implement a plan to coordinate the merger from an operations standpoint in consideration of these COVID-19 related issues.
“Stop & Shop continues to express enthusiasm about completing the merger. We are confident that with that commitment, and the diligence of both the Stop & Shop and King Kullen teams, we will meet this new challenge presented by the COVID-19 pandemic and complete this merger successfully.”