Q: Why ESG justify for merger? Kroger merger: “not to close stores” Hawley: “Zero?” A: “Zero!”

On 11/29/2022, Sens. Tom Cotton (R-Ark.) and Josh Hawley (R-Mo.) pressed McMullen over a religious discrimination case between the grocery giant and two former employees who were eventually fired for refusing to wear a uniform with a logo that they thought violated their religious beliefs. Hawley asked McMullen, “I think is what you’re saying it includes everything so have has your company ever fired an employee or disciplined an employee for their religious beliefs. McCullen said not that I’m aware of well.

Hawley: that’s interesting because senator cotton just read at some length into the record in EEOC lawsuit that’s a government lawsuit which your company just settled after an adverse ruling by a federal district court in which you apparently took disciplinary action to the extent of firing employees in Arkansas based on their religious beliefs do you think that’s workplace inclusion well I as I told.”

“I personally am not aware of this,” McCullen said, to which Hawley responded, “How is that possible? You’re being sued by the federal government. You have settled on a suit, and you don’t know about it?”

Josh Hawley of Missouri questioned whether the companies’ pledges to combine their efforts on environmental, social and governance issues should be a factor in considering the deal. “Why would having complementary ESG strategies be justification for a merger?” Hawley said. “Why would that be relevant at all?”

Hawley questioned McMullen about layoffs that might occur as a result of the merger, and the Kroger CEO said that no front line workers would be laid off. That didn’t seem to satisfy Hawley, who pushed McMullen to say that nobody would be laid off … which strikes me as a specious position, since there almost certainly will be front office duplication that will result in layoffs.

In the Senate hearing, Sen. Josh Hawley (R., Mo.) pressed McMullen and Sankaran on whether any store closings are planned.

“We do not plan to close stores as part of this merger,” McMullen said. “Zero?” Hawley replied. “Zero,” McMullen answered. “As CEO of the new company, Mr. McMullen makes those decisions,” Sankaran said when Hawley turned to him. “But as he said, he plans to close zero stores.”

McMullen added when Hawley asked further about store divestitures, “We will work with the FTC in terms of divesting stores to a viable competitor and, if that’s not successful, using the SpinCo structure as well.”

Republican on the Senate’s antitrust committee led a grilling of the CEOs of Kroger and Albertsons over their planned $25 billion grocery megamerger. Kroger CEO Rodney McMullen told the committee that these investments into lowering grocery prices and increasing wages for employees would be spread out in a four-year time frame.

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Q: Why ESG justify for merger? Kroger merger: “We do not plan to close stores” Hawley: “Zero?” A: “Zero!”