Albertsons has terminated its planned $24.6 billion merger with Kroger, first announced over two years ago, following court rulings blocking the deal due to antitrust concerns. The US District Court in Oregon and the King County Superior Court in Washington issued injunctions, leaving Kroger unable to close the transaction before the contractual deadline.
According to Foodbev Media, had the merger gone through, Kroger and Albertsons would have operated over 5,000 stores and around 4,000 retail pharmacies, employing nearly 700,000 people across 48 states.
However, in February, the US Federal Trade Commission filed a lawsuit to block the deal, raising concerns that the merger could lead to higher prices for consumers, store closures, and job losses. Vivek Sankaran, CEO of Albertsons, commented: “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. We are deeply disappointed in the court’s decisions.”
ALBERTSONS SUES KROGER FOR BREACH OF CONTRACT
Following the merger’s end, Albertsons has filed a lawsuit in Delaware’s Court of Chancery, accusing Kroger of willfully breaching their merger agreement. The company alleges Kroger failed to meet its obligation to exercise “best efforts” and to take “any and all actions” to secure regulatory approval and refused to divest assets critical for antitrust clearance. According to Albertsons, Kroger ignored regulator feedback, dismissed stronger divestiture buyers, and failed to cooperate with Albertsons.
Tom Moriarty, Albertsons’ general counsel and chief policy officer, commented: “A successful merger between Albertsons and Kroger would have delivered meaningful benefits for America’s consumers, Kroger’s and Albertsons’ associates, and communities across the country. Rather than fulfill its contractual obligations to ensure that the merger succeeded, Kroger acted in its financial self-interest, repeatedly providing insufficient divestiture proposals that ignored regulators’ concerns. Kroger’s self-serving conduct, taken at the expense of Albertsons and the agreed transaction, has harmed our shareholders, associates, and consumers. We are disappointed that the opportunity to realize the significant benefits of the merger has been lost on account of Kroger’s willfully deficient approach to securing regulatory clearance.”
In response, Kroger dismissed allegations as “baseless and without merit”. The company said in an 11 December statement: “Kroger refutes these allegations in the strongest possible terms, especially in light of Albertsons’ repeated intentional material breaches and interference throughout the merger process, which we will prove in court. This is clearly an attempt to deflect responsibility following Kroger’s written notification of Albertsons’ multiple breaches of the agreement, and to seek payment of the merger’s break fee, to which they are not entitled. We went to extraordinary lengths to uphold the merger agreement throughout the entirety of the regulatory process and the facts will make that abundantly clear.”
Albertsons said that it “is seeking billions of dollars in damages from Kroger to make Albertsons and its shareholders whole.” It stated that its shareholders have been denied the multi-billion-dollar premium Kroger had agreed to pay for Albertsons’ shares, and have been subjected to a decrease in share value during the prolonged merger approval process. The retailer also seeks to recover the “time, energy, and resources” it invested in the merger. Albertsons also stated it seeks payment of the $600 million termination fee, along with compensation for the “multiple years and hundreds of millions of dollars” spent during the merger review process, as well as recovery of certain expenses and costs.
Kroger denied these claims, asserting that the merger process was handled with integrity and dedication. The company stated: “We are incredibly proud of the Kroger team for how they worked through the merger process with the highest degree of integrity and commitment.”