BOISE, Idaho — Albertsons is giving up on its merger with Kroger and is suing the grocery chain, saying it didn't do enough to secure regulatory approval for the $24.6 billion agreement.
Kroger failed to exercise “best efforts” and to take “any and all actions” to secure regulatory approval of the companies’ agreed merger transaction, Albertsons General Counsel and Chief Policy Officer Tom Moriarty said Wednesday.
Albertsons alleges Kroger willfully breached the agreement by repeatedly refusing to divest assets necessary for antitrust approval, ignoring regulators' feedback, rejecting prospective buyers who would help the grocery chain divest, and failing to cooperate with Albertsons.
Because Albertsons notified Kroger of its decision to terminate the merger agreement, Albertsons said it's entitled to an immediate $600 million termination fee and is no longer under contractual constraints , therefore able to pursue other business opportunities.
The company is seeking billions of dollars in damages from Kroger to make Albertsons and its shareholders whole, Albertsons announced Wednesday. The company said Kroger agreed to a multi-million dollar premium for buying Albertsons' shares. Its shareholders have lost value, Albertsons said, as the grocery chain waited for the deal to be approved.
Kroger sent Denver7 the following statement in response to the lawsuit:
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.
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.
We are incredibly proud of the Kroger team for how they worked through the merger process with the highest degree of integrity and commitment.
We are confident in Kroger’s value creation model to drive sustainable growth. Kroger’s Board of Directors is currently evaluating next steps that serve the best interests of Kroger’s customers and associates, and create value for shareholders.
This development comes just one day after U.S. District Court Judge Adrienne Nelson issued a preliminary injunction blocking the merger, following a three-week hearing in Portland, Oregon. Then Judge Marshall Ferguson in Seattle issued a permanent injunction barring the merger in Washington after concluding it would lessen competition in the state and violate Washington’s consumer-protection laws.
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Judge temporarily halts proposed supermarket merger of Kroger, Albertsons
United Food and Commercial Workers Local 7 (UFCW7), which represents 23,000 workers across Colorado and Wyoming, celebrated the decision Tuesday.
"When Albertsons and Safeway merged in 2015, we lost 43 stores in this market, and it hurt workers. It hurt our retirees. There was less competition," Kim Cordova, president of UFCW7, said.
Kroger and Albertsons proposed what would've been the largest grocery store merger in U.S. history to help them better compete with big retailers like Walmart, Costco and Amazon. Under the merger, hundreds of stores would've been sold to C&S Grocers.
The Federal Trade Commission sued to block the merger earlier this year, saying it would raise prices and lower workers' wages by eliminating competition. It also said the divestiture plan was inadequate and C&S was ill-equipped to take on so many stores.
Denver7 has been following this story since the merger was first announced in October 2022. View a timeline of everything that's lead up to Wednesday's announcement, below.
Colorado Attorney General Phil Weiser spoke with reporters regarding the latest developments, Wednesday. He said that while he is still awaiting a ruling in the Colorado case, which was argued months ago in a Denver courtroom, he's optimistic it'll go in a way he wants.
"The two rulings yesterday are, highly suggestive of what we're going to hear from the Colorado court as well," Attorney General Weiser said. "A judge in Washington State Court permanently put a stop to the merger. A federal judge in Oregon said that the merger should be stopped at least on a preliminary basis while the FTC had its proceeding."
News of Albertons opting to scrap its merger with Kroger was welcome news to the Colorado Attorney General, it also felt that way for some grocery store employees, like Rickee Nelson.
"It was a small wave of relief initially, because I knew that the that it was blocked generally, but I knew that they could still appeal, but now that they've pulled out, we welcome that decision," Nelson said. "That means that we still have competition and for wages and for, you know, prices on groceries and stuff."
Nelson has worked at a Colorado Springs King Soopers for nearly 5 years. She told Denver7 friends of hers working at Safeway have felt in limbo for months.
"II have some friends who work at Safeway, and they were so stressed out for the last two years, you know, because they were really in limbo," she said. "They're the ones who are getting purchased, and they feel very much relieved. I have some friends who are like, I can retire now. I feel good at being able to retire. I don't have to worry about my pension dissolving, and like, yeah, so it's been really wonderful."
When it comes to the status of the Colorado case, Attorney General Weiser said there is still no decision but he expects it will not succeed.
Related stories:
- Colorado attorney general announces lawsuit to block Kroger, Albertsons merger (Feb. 14, 2024)
- US sues to block merger of grocery giants Kroger and Albertsons, saying it could push prices higher (Feb. 26, 2024)
- Kroger, Albertsons — still hoping to merge — agree to sell more stores to satisfy regulators (April 22, 2024)
- Kroger and Albertsons announce plans to offload hundreds of locations amid merger (July 10, 2024)
- 91 Colorado grocery stores to be sold if Kroger-Albertsons merger goes through (July 10, 2024)
- Kroger-Albertsons merger temporarily halted by Colorado judge until September (July 25, 2024)
- Kroger sues government for blocking merger with Albertsons (Aug. 20, 2024)
- Kroger and Albertsons defend merger plan in federal court against US regulators' objections (Aug. 24, 2024)
- Kroger and Albertsons hope to merge but must face a skeptical US government in court first (Aug. 25, 2024)
- Kroger's CEO says shoppers would see lower prices after the chain's merger with Albertsons (Sept. 4, 2024)
- Kroger and Albertsons make a final pitch for their merger before a judge decides whether to block it (Sept. 17, 2024)
- Colorado trial over Kroger-Albertsons merger begins on Monday (Sept. 26, 2024)
- Kroger-Albertsons merger trial begins in Colorado (Sept. 30, 2024)
- Colorado trial focused on Kroger-Albertsons mega merger enters third week (Oct. 14, 2024)
- Closing statements begin in Colorado trial over potentially largest supermarket merger in U.S. history (Oct. 24, 2024)