Low cost grocer Aldi mentioned Wednesday it plans to purchase 400 Winn-Dixie and Harveys supermarkets within the southern U.S.

Underneath a proposed merger settlement, Aldi will purchase all excellent shares of Jacksonville, Florida-based Southeastern Grocers Inc., the guardian firm of Winn-Dixie and Harveys. If the deal is authorised by regulators, it is anticipated to shut within the first half of 2024.

Monetary phrases of the deal weren’t disclosed. Each Southeastern Grocers and Aldi are non-public corporations. Aldi relies in Germany with a U.S. headquarters in Batavia, Illinois.

Aldi mentioned the deal helps its long-term progress technique within the U.S., the place it expects to have 2,400 shops by the tip of this yr. The Winn-Dixie and Harveys supermarkets it’s buying are primarily in Alabama, Florida, Georgia, Louisiana and Mississippi.

Aldi mentioned it’ll convert some areas to its personal model and format, which cuts prices with options like restricted choice and self-bagging. However it’ll function some shops beneath the Winn-Dixie and Harveys manufacturers.

Neil Saunders, an analyst with GlobalData Retail, mentioned the deal is uncommon for Aldi, which often opens its personal shops. He mentioned it suggests Aldi desires to experiment with extra conventional supermarkets that do not comply with its low-cost mannequin. He additionally mentioned Aldi’s deep pockets and environment friendly provide chain will make Southeastern’s shops extra aggressive.

The deal comes amid wider consolidation within the grocery business as prospects more and more defect to massive field shops like Walmart. Within the yr ending June 30, Walmart managed 25% of U.S. grocery gross sales, in accordance with Numerator, a market analysis agency. Aldi managed 2% whereas Southeastern Grocers managed lower than 1%. Aldi’s share had grown 0.2% since 2021, whereas Southeastern Grocers’ share was down 0.2%.

Final fall, Kroger and Albertsons __ two of the biggest U.S. grocery chains __ introduced plans to merge in a $20 billion deal. Regulators are reviewing that plan now; if it’s authorised, it’s anticipated to shut early subsequent yr. Collectively, Kroger and Albertsons presently management round 18% of the U.S. grocery market, Numerator mentioned.

However not everybody helps consolidation. The United Meals and Business Employees union, which represents nearly all of hourly employees at Kroger in addition to employees at Albertsons-owned Safeway, voted in Could to oppose the merger, saying the businesses weren’t being clear about its affect on jobs.

And on Wednesday, the secretaries of state of seven states with almost 5,000 Kroger and Albertsons shops __ together with Colorado, Arizona, Minnesota and Maine __ despatched a letter to the Federal Commerce Fee opposing the merger, saying it will restrict shopper selection and provides the shops no aggressive incentive to carry down costs.

Southeastern Grocers additionally plans to promote its 28 Fresco y Mas shops to Fresco Retail Group, an funding firm, which can proceed to function them beneath the identical model.

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