Albertsons shares soar on report of merger talks with Kroger

Albertsons' stock price soared as much as 11% in trading early Thursday, following reports that the retailer was in talks to merge with grocery giant Kroger.

Shares of Kroger, meanwhile, dipped slightly on the news.

Bloomberg News, citing sources familiar with the possible deal, was first to report that Cincinnati-based Kroger was discussing a merger with Boise-based Albertsons. A merger could be finalized as soon as this week, Bloomberg said, noting that the deal could also be delayed or could fall through entirely.

Neither Albertsons nor Kroger immediately responded to a WGB request to comment on the reported merger talks.

In February, Albertsons announced a strategic review of its business that included “potential strategic or financial transactions” from outside the company.

A merger of such large grocery players would likely face antitrust scrutiny with the Federal Trade Commission (FTC), according to an analyst quoted in the Bloomberg report.

“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,” Bloomberg Intelligence Analyst Jennifer Bartashus said. “If you think about the store bases of the two respective entities, there is a lot of overlap in very competitive markets.”

If the merger proceeds, it would create a grocery retailing goliath with a market value of about $47 billion, according to reports.

Albertsons Companies operates more than 2,200 stores in 34 states and Washington, D.C., under banners such as Safeway, Albertsons, Vons, Jewel-Osco, Tom Thumb, Shaw’s and many others. The retailer employees about 290,000 workers.

The Kroger Co. operates nearly 2,800 stores in 35 states, operating under 28 different names. Kroger banners include supermarkets such as Kroger, Ralphs, Dillons, King Soopers, QFC, Harris Teeter and others; department stores such as Fred Meyer, Fry’s Marketplace, Dillons Marketplace and others; and value-focused warehouses Food 4 Less and Foods Co.