Albertsons Walks Away From Kroger Merger

Albertsons Cos. Inc. (Boise, Idaho) said it has exercised its right to terminate its merger agreement with Kroger Co. (Cincinnati) after judges in a federal and state court separately issued injunctions blocking the proposed deal.

Minutes after releasing that statement, Albertsons also revealed it has filed a lawsuit against Kroger in the Delaware Court of Chancery, seeking billions of dollars in damages and claiming willful breach of contract and breach of the covenant of good faith and fair dealing arising from Kroger’s failure to exercise “best efforts” and to take “any and all actions” to secure regulatory approval of the companies’ agreed merger transaction.

Given two judges the rulings against the deal, “We have made the difficult decision to terminate the merger agreement,” said Albertsons CEO Vivek Sankaran. “We are deeply disappointed in the courts’ decisions.”

A federal judge in Oregon and a Washington state judge both issued court orders on Tuesday (Dec. 10) barring Kroger from acquiring its next largest competitor. Separately, both judges agreed with regulators that the merger risked reducing competition and expressed doubts that Kroger’s divestiture plan would alleviate the loss of a strong rival.

Looking ahead to continue operating Albertsons on its own, Sankaran said, “We are excited about our agenda to create long-term value and are committed to returning cash to our stockholders both in the near term and in the future. We will be providing additional details on our plan no later than our [next] earnings conference call in January 2025.”

Albertsons issued its statements about pulling out of the merger and suing Kroger at roughly 8:30 a.m. Wednesday (Dec. 11). Shortly after that, Kroger issued a statement which reads, in part:

“Albertsons’ claims are baseless and without merit.

“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.

“Kroger looks forward to responding to these baseless claims in court. 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.”