Albertsons has decided to abandon its merger plans with Kroger and is now suing the grocery giant. The lawsuit claims that Kroger did not do enough to obtain the necessary regulatory approval for their proposed $24.6 billion merger.
This decision comes shortly after two judges issued separate rulings to halt the merger. U.S. District Court Judge Adrienne Nelson imposed a preliminary injunction just a day prior, blocking the merger following a significant three-week hearing in Portland, Oregon. Meanwhile, in Seattle, Judge Marshall Ferguson granted a permanent injunction against the merger in Washington, citing concerns that it would reduce competition in the state and violate consumer protection laws.
In 2022, Kroger and Albertsons announced their intention to create what would be the largest grocery store merger in U.S. history. The companies argued that by merging, they would be better positioned to compete against major retailers such as Walmart, Costco, and Amazon.
Under the terms of their proposed merger, Kroger and Albertsons, which operate in 22 states, agreed to sell 579 stores in overlapping areas to C&S Wholesale Grocers. This New Hampshire-based supplier caters to independent supermarkets and owns notable brands like Grand Union and Piggly Wiggly.
However, the Federal Trade Commission stepped in earlier this year with a lawsuit aimed at blocking the merger. The agency argued that it would likely lead to increased prices for consumers and lower wages for workers by stifling competition. Additionally, the FTC criticized the divestiture plan as insufficient and questioned C&S’s capability to manage the large number of stores.
Albertsons alleges that Kroger has not fulfilled its obligations under the merger agreement. Specifically, Albertsons claims that Kroger failed to make the “best efforts” necessary to secure regulatory approval and did not take the required actions outlined in their agreement.
According to Albertsons, Kroger neglected to divest crucial assets needed for antitrust clearance, disregarded feedback from regulators, and rejected more suitable buyers for the divestitures.
“Kroger’s self-serving conduct has negatively impacted Albertsons’ shareholders, employees, and consumers,” stated Tom Moriarty, Albertsons’ general counsel.
In response, Kroger strongly disagreed with Albertsons’ claims, asserting that it was Albertsons that had engaged in “repeated intentional material breaches and interference” throughout the merger process.
Following the news, shares of Albertsons experienced an increase of more than 2% at the market opening, while Kroger’s stock saw a modest rise as well.
