The grocery giants Albertsons and Kroger are in talks to combine in a deal that would be one of the industry’s largest in years, creating a colossal food retailer aimed at taking on Walmart, four people with knowledge of the plans said.
The deal could be announced as soon as Friday, said the people, who requested anonymity because the talks were confidential.
A merger would combine the two largest grocery chains in the United States, which together generate annual revenue of $209 billion and have more than 5,000 stores across the country. That would put them more in the running against big-box operators like Walmart, Amazon and Costco. Last year, groceries made up $218 billion, or 55%, of Walmart’s U.S. sales.
A deal would almost certainly invite antitrust scrutiny from regulators, who have been zeroing in on the potential power of large companies to affect prices as inflation drives up the cost of food and other commodities. Kroger – parent company of Fred Meyer, QFC and other grocery chains – and Safeway parent Albertsons would most likely include a proposal to address any antitrust concerns by selling off certain stores. Lina Khan, who leads the Federal Trade Commission, which is likely to review any deal, has expressed skepticism that such solutions are sufficient.
“They’re going to face a level of scrutiny that grocery mergers have not in the past,” said William Kovacic, a former FTC chairman.
Kroger and Albertsons did not immediately respond to a request for comment on the potential merger, which was reported earlier by Bloomberg.
Kroger, based in Cincinnati, operates 2,750 grocery stores across the United States under banners that include Ralphs, Dillons and Harris Teeter and has a market capitalization of about $32 billion.
Albertsons, based in Boise, runs 2,200 supermarkets under names like Albertsons, Safeway and Vons and has a market capitalization of roughly $15 billion.
Albertsons was acquired in 2006 by private equity firm Cerberus and a consortium of investors, which merged it with Safeway in a $9 billion deal in 2015.
Since then, it had contemplated a number of ultimately aborted deals, including a merger with Rite Aid in 2018 as well as Whole Foods Market and Sprouts Farmer Market the year before. The grocer announced in February that it was exploring options, including a sale of the company.
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