Albertsons seeks more than $9 billion over failed Kroger deal
Albertsons sued Kroger, alleging it failed to use “best efforts” to get regulatory approval to their planned merger, which was blocked by a federal court.
Albertsons Cos. is demanding that Kroger Co. pay more than $9 billion for the collapse of what would have been the largest U.S. grocery chain merger in history.
Lawyers for Albertsons made the demand Monday in Delaware Chancery Court, where a two-week trial is slated later this month in a legal fight over who is to blame for the failure of the $24.6 billion deal. The plan to combine the two largest U.S. grocery chains was blocked by a federal court in December 2024. Albertsons is the parent company of Acme Markets.
Albertsons wants Judge Lori Will to find that Kroger “willfully” breached the merger agreement by failing to use “best efforts” to get regulatory approval, including a refusal to alter its plan to divest certain assets. Kroger should pay more than $9.3 billion, which includes a premium stockholders would have gotten if the deal had closed, and a $600 million termination fee plus $75 million in interest and additional costs, Albertsons said.
Under the terms of the agreement, Kroger had agreed “to remove any antitrust impediment to the merger — with no limit except that Kroger did not have to divest more than 650 stores,” Albertsons said in the court filing. “Kroger willfully breached these maximalist contractual commitments. Kroger wanted the Merger but only on its own terms.”
A Kroger representatives didn’t provide an immediate comment on the Albertsons filing.
“The bottom line is that Kroger made a promise and broke it,” Albertsons said in a statement. “Kroger should be held accountable for the harm it caused our shareholders, associates, and customers — and we look forward to proving our case in court.”
If Albertsons wins its case, its stockholders would benefit. The publicly-listed company counts private equity firm Cerberus Capital Management as its largest shareholder, with a more than 30% stake at the end of June.
The merger would have seen Kroger, the largest U.S. grocery chain, acquire the No. 2 grocer, Albertsons, with the aim of boosting competition against Amazon.com Inc., Walmart Inc., and other nonunionized rivals.
To win regulatory approval, the companies agreed to sell hundreds of stores to C&S Wholesale Grocers Inc. But a federal judge in December 2024 blocked the deal after ruling in favor of the U.S. Federal Trade Commission, which argued the divestiture plan was insufficient to address antitrust concerns.
Albertsons then terminated the deal and sued Kroger, accusing it of “willfully” violating the merger agreement by refusing to sell off the required assets. Albertsons said Kroger prioritized profit targets at the expense of ensuring regulatory approval.
“Kroger inflexibly held to its pre-merger targets — even refusing to divest assets specifically identified by the regulators as key to the success of its chosen divestiture buyer,” Albertsons said in a court filing. “Despite clear feedback from regulators, clear advice from its own counsel and economists, and repeated pleas from Albertsons and the divestiture buyer, C&S Wholesale Grocers, Kroger stuck to its failing lowball strategy right through the litigation that ended the deal.”
Kroger has said it did everything it could to secure approval and accused Albertsons of undermining its divestiture proposal to regulators. It alleged Albertsons secretly worked with C&S to get regulators to require Kroger to divest more stores than needed. C&S has said all of its communications with Kroger, Albertsons, and the regulators met contractual, legal, and ethical obligations, and were aimed at obtaining regulatory approval.
