Two of Long Island’s largest supermarket chains have decided they could not swallow a merger, and have rung up a No Sale sign.
Bethpage-based King Kullen and Quincy, Mass.,-based Shop & Shop, said last week that the coronavirus was the prime reason to call off a merger plan, which was announced about 18 months ago.
“A joint decision was made not to proceed with the acquisition because of significant, unforeseen changes in the marketplace that have emerged since the agreement was signed in December 2018, largely driven by the Covid-19 pandemic,” the two grocery chains said in a joint announcement.
They declined to comment beyond the prepared statement. The price was never disclosed.
Both companies have a significant presence on Long Island.
King Kullen, the nation’s first supermarket chain, is owned by the Cullen family. The company has 37 stores on Long Island, including five Wild By Nature outlets. It has stores in Wantagh and Levittown.
King Kullen has about 2,600 unionized employees.
Stop & Shop has more than 8,000 employees on Long Island at 51 stores. The company has outlets in Seaford and Levittown.
The chain is owned by Ahold Delhaize, a Dutch company, that also owns Food Lion, Giant Food, Hannaford and Peapod, an online grocer.
Retail analysts who followed the grocery store industry said
supermarkets across the country have experienced strong sales since the coronavirus pandemic began, since they were deemed essential businesses and were allowed to remain open.
The deal was expected to close at the beginning of 2019, but ran into delays. Neither company would say why.
But analysts speculated that the Federal Trade Commission had serious issues about the merger. The two companies themselves said the deal was continuing to undergo “closing conditions and regulatory review,” which included involvement by the FTC, which declined comment.
But Robert Newell, president of Local 1500, which represents employees at both King Kullen and Stop & Shop, said pushing through a merger at a time of such uncertainty made little sense. The decision to call off the merger, Newell said, was good news for the union.
“There would have been some contraction for sure,” in a merger, Newell said. He said the FTC’s prolonged decision-making process played a role in the decision by the companies.
“We understand the FTC has been a pretty sizable obstacle,” Newell said.
Additionally, Ahold recently announced a deal for its Food Lion chain to buy 62 Vi-Lo stores and Harveys Supermarkets in North and South Carolina and Georgia.
Lisa O’Leary, secretary-treasurer of Local 342, which represents about 200 employees at King Kullen and Wild By Nature, said she was happy there would be no job losses as a result of a merger.
“I expect King Kullen will continue to operate as always,” O’Leary said.
King Kullen is one of Long Island’s largest employers. The grocery company was founded in 1930 by Michael J. Cullen on Jamaica Avenue in Queens. King Kullen calls itself “American’s first supermarket chain.” The Smithsonian Institution confirms that.