- Kroger and Albertsons could sell or close stores if their $20 billion merger is approved.
- The companies have the most overlap in cities including Washington DC, Chicago, and Los Angeles.
The proposed $25 billion merger of Kroger and Albertsons would bring together thousands of grocery stores — so many that they would overlap in multiple regions of the US.
As rivals, Kroger and Albertsons often operated stores near each other. That's created areas of the US where the combined company could sell off or close stores.
Among the areas of overlap are store networks in the metro areas of Washington DC, Chicago, and Los Angeles, according to a map of locations that the companies provided in an investor presentation about the deal.
Areas around Houston, Chicago, Albuquerque, Seattle, and Portland, Oregon, also have overlapping supermarkets.
In some ways, the companies' store networks complement each other. Kroger operates many stores in Southern states such as Georgia, Tennessee, and North Carolina as well as Midwestern ones like Indiana and Michigan. Albertsons, meanwhile, is comparatively stronger than Kroger in the West and the Northeast.
But the regions where the companies will have the most stores, and the highest percentage of sales, are likely to be the biggest focus for the Federal Trade Commission, The Wall Street Journal reported in October.
As part of the deal, Kroger and Albertsons have agreed to sell up to 650 stores.
Those areas present a problem as well as an opportunity for the companies, said Ken Fenyo, president, research and advisory at retail and technology firm Coresight.
"In many locations, there's a Kroger's right across from an Albertsons, which is highly inefficient," Fenyo said in a statement after the companies announced the merger. Eliminating stores in those locations is one way that Kroger and Albertsons could cut costs as a combined company, he added.
Albertsons and Kroger have grown through similar acquisitions
Both companies have histories of growing through acquisition.
Kroger, founded in 1883, began expanding beyond its home city of Cincinnati in the 1950s with acquisitions of chains in Texas and Wisconsin. In the 1980s, it acquired Kansas-based grocer Dillon Companies, which bolstered its presence in Western states. Since then, it's filled out its national presence by acquiring Pacific Northwest grocer Fred Meyer in 1998 and Harris Teeter in 2013.
Boise, Idaho-based Albertsons has followed a similar path of acquisitions and deals over the last few decades. One of the highest-profile came in 2015 when Albertsons acquired Safeway. At the time, Albertsons was owned by Cerberus Capital Management.
In order to get federal approval for their merger, Albertsons and Safeway had to sell just under 150 to another grocery chain.