Albertsons may have to sell itself, close stores, cut jobs if it can’t merge with Kroger

Albertsons (NYSE:ACI) may face a bleaker future if it isn’t able to complete its almost $25 billion sale to Kroger (NYSE:KR).

“There are limits to what we can accomplish without the scale,” Albertsons attorney Enu Mainigi said during the opening statements of the first day of the trial of the Federal Trade Commission’s attempt to block the deal on Monday. “If a go-it-alone Albertsons is going to have a chance of competing effectively, it will need to fundamentally change it’s cost structure.”

The standalone strategy for Albertsons (ACI) may include layoffs, closing stores, and/or exiting certain markets,” Mainigi explained.

“These are the kind of things that are on the table if the merger does not go through,” Mainigi added. “If somehow Albertsons doesn’t succeed at those kind of measures, the likelihood is it is a candidate for sale to somebody else.”

The FTC sued to block the combination in February, saying the supermarket deal would lead to higher prices for consumers. Eight states and Washington, D.C. also teamed up with the regulator to halt the deal. Colorado and Washington also separately filed lawsuits to try to put an end to the deal.

The supermarket chains argue that they need to get bigger to better compete with Walmart (WMT) Amazon (AMZN) and Costco (COST). They also say that through the divestiture of nearly 600 stories to C&S Wholesale Grocers they will be creating a viable competitor in the supermarket space.

The trial is expected to last until Sept. 13 in Portland, Oregon federal court in front of Judge Adrienne Nelson.