Stop & Shop deal to buy King Kullen is off, companies say

Grocer Stop & Shop will not be buying iconic Long Island supermarket chain King Kullen — and the retailers are citing changes in the marketplace due to the COVID-19 pandemic as the reason.

The chains announced the deal was off Wednesday, a year and a half after they said Stop & Shop planned to buy the Bethpage-based King Kullen Grocery Co. Inc.’s 37 stores for an undisclosed price. Three King Kullens have closed since then.

“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 joint statement said.

Asked how COVID-19, which began to hit the U.S. hard in February, affected a sale that was announced in January 2019, a King Kullen spokesman said the merger agreement prevented the company from commenting beyond the statement issued Wednesday.  

Stop & Shop did not respond to the same inquiry.

But grocery stores nationwide have seen sales soar since the pandemic began. Deemed essential, grocery stores were among the businesses allowed to remain open throughout the state-mandated shutdowns aimed at helping to stop the spread of the virus in New York State.

Quincy, Massachusetts-based Stop & Shop has the largest grocery market share on Long Island, where it employs more than 8,000 workers at 51 stores.

The chain is owned by Ahold Delhaize, a Dutch company whose other grocery stores include Food Lion, Giant Food and Hannaford. Ahold also owns Peapod, the online grocery retailer.

Stop & Shop announced in January 2019 that it planned to buy the family-owned King Kullen Grocery Co. – 32 King Kullen supermarkets and five Wild by Nature natural food stores, all on Long Island. 

At that time, Stop & Shop said the deal was expected to close in the first quarter of 2019.

But the closing ran into delays that neither company would detail.

Also, King Kullen closed three stores in 2019 – in Lake Ronkonkoma, Mt. Sinai and North Babylon – that it said were underperforming.

As the sale process continued to stretch out, Stop & Shop repeatedly said the deal was continuing to undergo “closing conditions and regulatory review,” which included the U.S. Federal Trade Commission’s involvement.

The FTC, which investigates anti-competitive practices, told Newsday in March 2019 that it does not comment on or confirm investigations, or disclose the contents of complaints.

The agency could not be immediately reached Wednesday for comment about the canceled sale.

But the president of a local union that represents some of the King Kullen employees said the federal agency had been a roadblock.

“We understand the FTC has been a pretty sizable obstacle,” said Rob Newell, president of United Food and Commercial Workers International Union Local 1500 in Westbury.

Newell said he did not know what issues in particular held up the deal but that, after 18 months of trying to close the sale, both Stop & Shop and King Kullen were probably ready to move on.

“Quite honestly, I think it just died on the vine,” he said.

Other reasons for the sale falling through could include Ahold Delhaize announcing a huge deal last week for its Food Lion chain to acquire 62 Bi-Lo stores and Harveys Supermarkets in the Carolinas and Georgia from Southeastern Grocers, said Jeff Metzger, publisher of Food Trade News in Columbia, Maryland, and a Wantagh native.  

“Perhaps corporate priorities have shifted and King Kullen was not the financial or emotional investment they wanted to go forward with,” he said.

Also, King Kullen continuing to close stores and experience negative comparable store sales could be a factor, he said.

King Kullen declined to say how many employees it has but union officials provided some numbers.

UFCW Local 1500 represents about 2,400 King Kullen and Wild by Nature employees, including deli staff, produce workers and cashiers, Newell said.

UFCW Local 342 in Mineola represents about 200 employees in King Kullen’s and Wild by Nature’s meat and seafood departments, said Lisa O’Leary, secretary-treasurer.

“As far as Local 342 is concerned, the King Kullen members will continue to go to work as normal. King Kullen is a vital part of the Long Island economy and always has been. They have plenty of business. We see no reason why this [canceled sale] would affect our members in any way,” she said.

Stop & Shop’s employees are unionized, too.

King Kullen, the last major family-owned supermarket chain on Long Island, was founded by Michael J. Cullen on Jamaica Avenue in Queens in 1930. The grocer markets itself as “America’s first supermarket,” a claim confirmed by the Smithsonian Institution.

King Kullen looks forward to continuing to serve Long Island customers, Brian Cullen, co-president of the chain, said in the statement Wednesday. “We are enthusiastic about the future and well-positioned to serve Nassau and Suffolk counties for many years to come. In short, we are here for the long term,” he said.

By Tory N. Parrish

tory.parrish@newsday.comToryParrish1

Tory N. Parrish covers retail and small business for Newsday. She has worked at the Pittsburgh Tribune-Review and Observer-Dispatch in Utica, N.Y.