(Bloomberg) -- Rodney McMullen is facing his greatest test yet as the head of the largest grocer in the US. 

The calm, pragmatic Kroger Co. chief executive officer is in a high-stakes fight over his boldest bet: a $24.6 billion merger with Albertsons Cos. that could shake up the US grocery industry. The Federal Trade Commission, along with eight states and Washington, DC, on Monday sued to block Kroger’s acquisition of Albertsons, arguing that the tie-up would lead to higher grocery prices and lower wages. The parties plan to litigate in court. 

Kroger said Monday that the FTC’s decision would further strengthen the growing dominance of Amazon.com Inc., Walmart Inc. and Costco Wholesale Corp. and that blocking the deal would hurt consumers and workers. 

McMullen, 63, has spent more than four decades at Kroger since the late 1970s, when he started as a part-time bagger at a store in Lexington, Kentucky. Since becoming CEO about a decade ago, he has led the company through various acquisitions, the emergence of online shopping and the pandemic. 

“I think he has his heart in this and wants this to work,” said Mike Ellis, who worked with McMullen for about a decade, including as his chief operating officer, before he retired in 2015. “From the dollars-and-cents point, there’s nothing bigger than this. This is the big one.”

Kroger agreed in 2022 to buy Albertsons, which would be the biggest US grocery deal in history if it closes. The companies said the merger would increase their market share, give them more leverage in negotiations with suppliers and improve their technology. They argued that the merger is needed to better compete with bigger, nonunionized rivals Amazon, Walmart and Costco. 

Pushback followed from elected officials, unions and consumer advocacy groups, prompting McMullen to testify in a Senate hearing and travel across the country to defend the merger. 

“Kroger has got sufficient scale to compete without this,” James McCann, former CEO of Ahold USA, which operates Stop & Shop and other chains, said in an interview. “But it would make them a truly national player. This is the last missing piece of the jigsaw.” 

Numbers Guy 

McMullen grew up on his family’s farm in Kentucky and went to the University of Kentucky, where he studied accounting and finance. He took the bagging job at Kroger in 1978. After receiving his master’s degree in accounting, he joined Kroger’s finance team and moved up through the ranks. He served as chief financial officer, vice chairman and chief operating officer before becoming CEO.

At Cincinnati-based Kroger, he’s helped lead major milestones for the 141-year-old company. McMullen and his team oversaw the integration of a $13 billion merger in 1999 with Fred Meyer Inc., which cemented Kroger as the biggest grocer in the country. The company later acquired Harris Teeter, Roundy’s and Home Chef, among others, and sold its network of convenience stores. 

“He really understands numbers given his background,” said Ken Fenyo, chief marketing officer at retail technology company Grabango. Fenyo previously led Kroger’s loyalty business before selling his digital coupon business to the grocer in 2014.

Under McMullen’s tenure, Kroger diversified beyond the core retail business into areas that have faster growth and higher margins. He helped establish a business dedicated to data analytics, which later became the foundation of the company’s advertising division. 

More recently, Kroger signed a deal with Ocado Group Plc in which the UK company builds warehouses for online orders. The partnership has drawn skepticism from some industry analysts who have questioned the model’s profitability. And stakes are higher for the Albertsons merger. 

If the deal comes to fruition, “it will be a huge mark of what he’s been able to work out,” Fenyo said. 

Eager Student  

Ellis recalled traveling from New York to France with McMullen to visit stores and plants, during which McMullen would spend hours asking people questions about various parts of the retail business such as apparel and e-commerce. He has valued surrounding himself with people who have different backgrounds. 

“He’s an excellent student. He tries to learn everything he can,” Ellis said. While the duo didn’t discuss McMullen’s aspirations as the CEO, McMullen’s goal was straightforward: Make the organization better every year. 

“He’s not a power-trip guy,” Ellis said. “Rodney wouldn’t be looking at this if he didn’t think it was a good deal.” 

©2024 Bloomberg L.P.