Two U.S. grocery stores are reportedly negotiating terms that would join them into one giant chain possibly worth almost $50 billion.
People familiar with the conversation said Kroger Co. and its rival Albertsons Co. are in talks that could see the two stores merge into a “supermarket titan,” the New York Post reported Thursday. Krogers’ potential purchase would be the largest U.S. supermarket deal since 2006, when Supervalu, CVS Health Corp. and a group of investment firms bought Albertsons for around $9.8 billion, Bloomberg reported.
The details of the deal (which would create a market valuation of $47 billion for the new, combined company) are not immediately available, the NY Post noted. (RELATED: Food Prices Skyrocketed In September)
Albertsons is the fourth-largest grocery store in the U.S., with a 5.7% market share, according to Bloomberg. Albertsons owns or operates several regional store chains, including Acme, Tom Thumb, Randalls, Safeway, Jewel-Osco and Market Street. Kroger, at 9.9%, is currently the second-largest grocery store by market share.
Bloomberg Intelligence analyst Jennifer Bartashus warned rising grocery prices could make it difficult for the deal to get approved by the Federal Trade Commission (FTC), as antitrust officials want to prevent situations where major mergers cause competition in the market to be eliminated.
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“This is the type of transaction that really looks good on paper, but the actual practicality of achieving regulatory approval by the FTC could be difficult,” Bartashus said, according to the outlet. “If you think about the store bases of the two respective entities, there is a lot of overlap in very competitive markets.”
Albertsons and Kroger are both heavily represented in the West Coast market, but in the Northeast, Kroger isn’t as prominent, Bloomberg noted.