Albertsons has decided to abandon its merger with Kroger and has filed a lawsuit against the grocery chain, claiming that Kroger did not make sufficient efforts to obtain regulatory approval for the $24.6 billion deal.
The decision to give up on the merger and pursue legal action came after two judges issued injunctions halting the merger in separate court cases.
Driving the news: U.S. District Court Judge Adrienne Nelson granted a preliminary injunction blocking the merger after conducting a three-week hearing in Portland, Oregon.
- Shortly after, Judge Marshall Ferguson issued a permanent injunction in Seattle, citing concerns about reduced competition and violation of consumer-protection laws in Washington.
Flashback: In 2022, Kroger and Albertsons proposed what would have been the largest grocery store merger in U.S. history, aiming to enhance their competitiveness against major retailers such as Walmart, Costco and Amazon.
- As part of the merger agreement, Kroger and Albertsons agreed to sell 579 stores where their locations overlapped to C&S Wholesale Grocers, a New Hampshire-based supplier to independent supermarkets.
- However, the Federal Trade Commission (FTC) intervened, suing to block the merger, claiming it would lead to higher prices, lower wages, and inadequate divestiture plans.
The big picture: Albertsons accused Kroger of failing to make “best efforts” to secure regulatory approval, including reluctance to divest necessary assets and disregarding regulators’ feedback on divestiture plans.
- Kroger denied the allegations, asserting that Albertsons was responsible for repeated intentional breaches and interference throughout the merger process.
- Following the developments, shares of Albertsons rose by more than 2% at the opening bell, while Kroger’s stock experienced a slight increase.
What they’re saying: “Kroger’s self-serving conduct, taken at the expense of Albertsons and the agreed transaction, has harmed Albertsons’ shareholders, associates and consumers,” said Tom Moriarty, Albertsons’ general counsel, in a statement.
