Aldi’s U.S. unit agreed to buy Southeastern Grocers Inc., the owner of the Winn-Dixie and Harveys supermarket chains, in a bet on expanding in growing states such as Florida and Georgia.
The deal includes about 400 locations, some of which are located in Alabama, Louisiana and Mississippi, Southeastern said in a statement Wednesday. Aldi currently has about 2,300 U.S. locations, and the expansion will bolster the German-owned discounter’s ability to go toe-to-toe with rivals such as Walmart Inc. and Publix Super Markets in the Southeast.
“As one of the fastest-growing retailers in the U.S., this move to acquire a solid core business with a well located store footprint and great people is yet another way we’re delivering great products at the lowest possible prices for shoppers,” said Jason Hart, CEO of Aldi’s US operation.
The acquisition, which is expected to close in the first half of next year, would further consolidate US supermarkets as grocers face huge investments to bulk up e-commerce operations. Amazon.com Inc. is working on the biggest overhaul of its grocery business since it bought Whole Foods Market in 2017, while Kroger Co.’s proposed $24.6 billion purchase of Albertsons Cos. is undergoing an antitrust review.
Aldi and Southeastern, which are both closely held, didn’t disclose terms of the transaction.
Southeastern will sell another 28-store chain it owns, Fresco y Más, to Fresco Retail Group LLC.
Aldi will evaluate the Winn-Dixie and Harveys locations to decide which ones will be converted to its format. Aldi is know for offering discount prices on a limited selection of goods, many of which are sold under the retailer’s house brands.
The stores that aren’t converted to Aldi’s format will continue to operate as Winn-Dixie and Harveys stores — a significant change in Aldi’s strategy.
Aldi’s purchase of traditional supermarkets may have an effect on the U.S. Federal Trade Commission’s antitrust analysis of the Kroger-Albertsons deal, said Burt Flickinger, managing director of Strategic Resource Group and a veteran of the industry. He is currently advising Kroger.
A key question for the FTC as it examines local grocery markets is which companies should be considered competitors of the two supermarket chains.
“It’s the catalyst for the FTC to really consider Aldi as a competitor to Kroger and Albertsons for the first time,” Flickinger said. “It changes Aldi from a multi-region retailer to a national retailer across America.”
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