Albertsons Companies (ACI) shares surged higher Thursday following a report that suggest the grocery store chain is in talks to merge with its larger rival Kroger (KR).
Bloomberg News reported that Boise, Idaho-based Albertsons could reach a merger agreement with Kroger as early as this week on a combination that would create a grocery market giant valued at around $47 billion.
The deal is likely to face scrutiny from U.S. officials, including the Federal Trade Commission, however, as it would not only create a grocery market giant, with more than $200 billion in annual sales -- topping third-ranked Costco Wholesale -- but also potentially limit consumer choice when food price inflation is running at its fastest pace in more than four decades.
Albertsons shares were marked 7.2% higher in early Thursday trading following news of the potential deal while Kroger shares fell 1.6% to $45.31 each.
Last month, Kroger posted stronger-than-expected second quarter earnings, while boosting its full-year profit forecast, as the country's biggest grocery store chain retained more value-focused shoppers amid a near-record surge in food price inflation.
Kroger said adjusted earnings for the three months ending in July came in at 90 cents per share, up 12.5% from the same period last year, on revenues of $34.6 billion
Looking into the 2023 fiscal year, which ends next February, Kroger said it sees full year earnings in the range of $3.95 to $4.05 per share, a 10 cent improvement from its prior guidance in June.
