Kroger Co. is in talks about a tie-up with rival Albertsons Cos in a deal that would create a US grocery giant, people familiar with the matter said.
A cash-and-stock deal valuing Albertsons at about $25 billion could be reached as soon as Thursday evening in New York, one of the people said, asking not to be identified discussing confidential information. No final decisions have been made and talks could still be delayed or falter.
The exact structure and price of the deal couldn’t immediately be learned. Any potential transaction, if agreed, may face antitrust scrutiny and require asset sales.
Representatives for Albertsons and Kroger couldn’t immediately be reached for comment.
The potential deal would be among the largest US retail transactions in years, and the biggest US supermarket deal since the last time Albertsons changed in 2006, when it was was bought by Supervalu, CVS Health Corp. and a group of investment firms for about $9.8 billion, according to data compiled by Bloomberg.
These talks come amid a dramatically different dealmaking landscape. Soaring food prices are a key driver behind inflation in the US, while industry consolidation has given top players in the space much greater market share. That could present a number of political and regulatory hurdles for this kind of tie-up, as politicians blame corporate greed for higher prices, while antitrust officials eye tougher merger rules.
“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,” said Jennifer Bartashus, an analyst at Bloomberg Intelligence. “If you think about the store bases of the two respective entities, there is a lot of overlap in very competitive markets.”
Nationwide, Kroger is the No. 2 grocery seller, with a 9.9% market share compared with Walmart Inc.’s almost 21%, according to Numerator. Albertsons is fourth with 5.7%.