Potential Kroger purchase of Albertson likely to see regulatory issues (NYSE:ACI)

A potential Kroger (NYSE:KR) acquisition of Albertsons (NYSE:ACI) would likely see regulatory pushback, according to Oppenheimer.

The two supermarket chains have overlaps in some key West Coast states such as California and Washington, Oppenheimer said in an intraday report.

Bloomberg first report that Kroger (KR) was in talks with Albertsons (ACI) about a transaction and CNBC’s David Faber later said that Kroger is planning an an all cash deal for ACI that could be announced/agreed to as soon as Friday morning. Faber also highlighted that the two chains have been in involved in on again off again talks for months.

U.S. antitrust regulators have been taking a tougher stance against mergers under the Biden administration, though the Dept. of Justice have suffered legal defeats in in recent weeks, including in UnitedHealth’s purchase of Change Healthcare and U.S. Sugar Corp.’s planned acquisition of Imperial Sugar Co., where judges denied the regulator’s efforts to blocks the deals.

Regulators have challenged some well known retail deals over the past decades include Walgreens attempt to buy Rite Aid and Staples efforts to buy Office Depot.

The Albertsons potential sale comes after ACI announced in late February that it was evaluating strategic alternatives. Last month ACI said that a lock-up agreement with some of the company’s sponsors was extended until the company’s earnings release in October, which had some investors expecting that there may be a deal coming.

Albertsons (ACI) shares surged 11%, while Kroger fell 1.3%.

Albertsons is scheduled to report its earnings on Tuesday.