Table of Contents
BOISE, Idaho — Albertsons Cos. formally terminated its $25 billion merger agreement with Kroger Co. on Wednesday and filed a lawsuit accusing its rival of breaching the contract. The move marks a dramatic end of a two-year effort to unite the two grocery giants, and follows back-to-back court rulings blocking the merger over concerns it would stifle competition and lead to higher grocery prices.
Albertsons alleges Kroger failed to fulfill its contractual obligations to secure regulatory approval, claiming the company ignored regulators' concerns, rejected adequate divestiture proposals, and prioritized its financial interests over the success of the merger. The lawsuit, filed in Delaware’s Court of Chancery, seeks billions in damages, along with a $600 million termination fee.
“Rather than fulfill its contractual obligations to ensure the merger succeeded, Kroger acted in its own financial self-interest, providing insufficient divestiture proposals that ignored regulators’ concerns,” said Tom Moriarty, Albertsons’ General Counsel.
The merger faced fierce opposition from regulators and consumer advocates who argued it would reduce competition in the grocery market. On Tuesday, federal and state courts sided with the Federal Trade Commission (FTC) and state attorneys general, who contended the deal would drive up prices and weaken labor protections.
The FTC, joined by officials from eight states and the District of Columbia, argued the merger would exacerbate surging grocery costs, which have climbed 25% over the past four years. Despite Kroger's defense that the deal would lower prices at Albertsons’ stores through operational savings, the courts rejected the rationale.
Albertsons CEO Vivek Sankaran acknowledged the setback in a statement: “Given the recent federal and state court decisions to block our proposed merger with Kroger, we have made the difficult decision to terminate the merger agreement.”
As Albertsons pursues damages, it also faces pressure to regain momentum after what it described as “years of unnecessary limbo” during the merger process. The grocery chain cited lost opportunities and diminished shareholder value resulting from Kroger’s alleged actions.
Albertsons shares rose 1.5% in premarket trading Wednesday, signaling investor support for the company's pursuit of financial restitution, while Kroger shares dipped marginally.
