In a dramatic turn of events, Albertsons has formally terminated its proposed $24.6 billion merger w[...]
In a dramatic turn of events, Albertsons has formally terminated its proposed $24.6 billion merger with Kroger, opting instead to file a lawsuit accusing Kroger of failing to exercise its best efforts to secure regulatory approval of the deal. This legal battle marks the latest chapter in the saga of two of the United States’ largest supermarket chains attempting to consolidate in the face of fierce competition from retail behemoths like Walmart and Amazon.
After the companies proposed the merger in 2022, the Federal Trade Commission (FTC), Washington, and Colorado sued to block it, citing increased prices and decreased wages as concerns. The merger was struck down by separate rulings in Oregon and Washington earlier this week. U.S. District Court Judge Adrienne Nelson issued a preliminary injunction blocking the deal, followed shortly by a permanent injunction from Superior Court Judge Marshall Ferguson. Both decisions cited antitrust concerns, emphasizing that a merger would diminish competition and violate consumer protection laws.
Albertsons announced its decision to abandon the merger early Wednesday, accusing Kroger of breaching their contract by failing to exercise “best efforts” to secure regulatory approval. Albertsons asserts that Kroger ignored feedback from regulators, and rejected stronger divestiture options. Albertsons seeks billions of dollars in damages, including a $600 million termination fee, reimbursement for legal costs, and compensation for lost shareholder value.
In a statement, Kroger asserted that Albertsons itself was responsible for “multiple breaches” of the merger agreement and stated it “looks forward to responding to these baseless claims in court.” Together, Kroger and Albertsons would have controlled approximately 13% of the U.S. grocery market, a move the companies argued was necessary to compete against Walmart (22% market share) and other large retailers.
Albertsons, which operates Safeway, Jewel-Osco, and Shaw’s, now faces questions about its future. While its CEO Vivek Sankaran has touted the company’s “strong financial condition” following the deal’s termination, industry experts note that its significant debt and underperforming stores could hinder its ability to find another buyer. Kroger, which owns Ralphs, Fred Meyer, and Harris Teeter, has signaled confidence in its standalone financial health, announcing a $7.5 billion share buyback program earlier this week.
Additional Reading:
Albertsons sues Kroger for failing to win approval of their proposed supermarket merger, AP News (December 11, 2024)
Albertsons sues Kroger and ends failed grocery megamerger, NPR (December 11, 2024)
Albertsons sues Kroger after judge rules against grocery merger, CNBC (December 11, 2024)
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