(Reuters) -U.S. grocery giant Kroger Co is in talks to merge with smaller rival Albertsons Companies Inc, Bloomberg News reported on Thursday, citing people familiar with the matter.
A deal would create a combined company with a market valuation of about $47 billion and would be one of the biggest in recent years in the retail space.
Shares of Albertsons rose 7% on the report, while Kroger’s stock slipped.
Merger talks between the two biggest U.S. supermarket chains come at a time when retailers are seeing their margins squeezed from soaring costs and supply chain disruptions after a boom at the height of the pandemic.
“It is hardly surprising,” Neil Saunders, managing director of GlobalData Retail, said of the deal talks.
“Such consolidation would, in theory, improve the economics for both businesses giving them even more buying power than they currently enjoy.”
Kroger, which also houses supermarket chains such as Fred Meyer, Ralphs and King Soopers, trails Walmart Inc, the top grocer in the country. Boise, Idaho-based Albertsons includes the Safeway banner.
A deal could be reached as soon as this week, Bloomberg reported, adding that no final decision has been taken and talks could still be delayed or falter.
Both companies did not immediately respond to Reuters’ requests for comment on the report.
(Reporting by Aishwarya Venugopal in Bengaluru; Editing by Shinjini Ganguli and Sriraj Kalluvila)
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