Safeway may be affected if supermarket giants merge

A potential merger between two of the country’s largest grocery corporations could affect supermarkets in the Bay Area — and go down as one of the biggest consolidations in retail history.

Kroger Co. and Albertsons Cos. announced Friday that they have entered into a “definitive agreement” under which they will merge their organizations.

The $24.6 billion deal is expected to close in early 2024, the companies said, assuming it clears regulatory and antitrust hurdles.

The two companies collectively employ more than 710,000 workers and operate almost 5,000 stores, 66 distribution centers, 52 manufacturing plants, 3,997 pharmacies and 2,015 fuel centers nationwide.

Albertsons’ Safeway division has a significant presence in the Bay Area, with 161 stores. Kroger, meanwhile, has a far smaller footprint here, with five Foods Co. stores in San Francisco, Oakland, Richmond and Pittsburg. Across Northern California it has another 13 Foods Co. locations, and in Southern California, Kroger operates close to 300 Ralphs stores.

The purchase could give Kroger a commanding presence in the Bay Area’s grocery store market, as well as for California as a whole, with around 450 stores statewide, more than any other grocer.

In a regulatory filing Friday, Kroger said the companies may need to divest or spin off as many as 375

stores nationwide to address antitrust concerns, which could include Safeway stores.

Taking into account the potential store reductions, the combined company would account for around 13% of the U.S. grocery

market, behind only Walmart’s

22% share, according to an analysis by JPMorgan.

A Chronicle tally of Safeway stores showed them concentrated in Northern California and mostly clustered in the western part of the state.

The companies said their combined reach was at least 85 million households.

Kroger operates Fred Meyer, Ralphs, Harris Teeter,

Dillons and other stores; Albertsons also operates Vons in Southern California.

Boise, Idaho-based Albertsons bought Pleasanton-based Safeway in 2015 with the financial backing of private equity firm Cerberus Capital Management, which still holds nearly 30% of Albertsons shares.

The company is scheduled to report earnings this week.

San Francisco Chronicle deputy creative director Hilary Fung contributed to this

report.