Kroger, rival Albertsons in talks for massive grocery merger - Dallas Business Journal

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The merger would create a behemoth in the grocery business, but analysts question whether antitrust issues would make it unlikely to happen.

Boise, Idaho-based Albertsons said in February it hired Goldman Sachs and Credit Suisse to begin a review of"potential strategic alternatives aimed at enhancing Albertsons’ growth and maximizing shareholder value." It said it will look at its balance sheet, “potential strategic or financial transactions” and other options. And it said it will be"responding to inquiries," indicating it would consider offers to buy the company.

The two companies overlap and compete in many markets, raising antitrust concerns if such a deal were to take place. The Federal Trade Commission would evaluate antitrust issues. Costco is third, he said. Walmart, which sells a much-broader array of merchandise, and Costco, a membership warehouse chain, aren’t considered traditional supermarkets like Kroger and Albertsons are., managing director at New York-based retail and consumer goods consulting firm Strategic Resource Group, felt even more strongly.

The two would combine for more than 50% of the market in dollars, he said. That’s something he says the FTC wouldn’t approve. Instead, he sees Kroger looking to buy smaller multiregional supermarket companies ranging from $500 million in annual sales to $5 billion., an equity research analyst at downtown-based Bartlett Wealth Management, said while antitrust issues are a concern, they don’t represent an automatic deal-breaker.

 

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