Albertsons abandons Kroger merger, sues grocery chain for failing to reach deal

Albertsons is abandoning its merger with Kroger and suing the grocery chain, saying it didn’t do enough to gain regulatory approval for the $24.6 billion deal.

The move took place the next day two judges stopped the merger in separate court cases. U.S. District Court Judge Adrienne Nelson on Tuesday issued a preliminary injunction blocking the merger after holding a three-week hearing in Portland, Oregon. An hour later, Judge Marshall Ferguson of Seattle issued a permanent injunction barring the merger in Washington after finding it would reduce competition in the state and violate consumer protection laws.

Kroger and Albertsons proposed in 2022 what the largest grocery store merger in the history of the United States. The companies said a merger would help them better compete with big retailers like Walmart, Costco and Amazon.

Under the terms of the merger agreement, Kroger and Albertsons – which compete in 22 states – agreed to sell 579 stores in places where their locations overlap C&S Wholesale Grocersa New Hampshire-based independent supermarket supplier that also owns the Grand Union and Piggly Wiggly store brands.

But the Federal Trade Commission sued to block the merger earlier this year, saying it would raise prices and lower workers’ wages by eliminating competition. He also said that the divestment plan was inadequate and that C&S was not equipped to handle so many stores.

On Wednesday, Albertsons said Kroger had not made “best efforts” and had not taken “all steps” to obtain regulatory approval for the companies’ agreed-upon merger transaction.

Albertsons said Kroger refused to divest assets needed to pass antitrust laws, ignored feedback from regulators and rejected stronger buyers.

Kroger deliberately violated the merger agreement in several key ways, including repeatedly refusing to divest assets necessary for antitrust approval, ignoring feedback from regulators, rejecting stronger buyers, and failing to cooperate with Albertsons.

“Kroger’s self-serving conduct, taken at the expense of Albertsons and the agreed-upon transaction, harmed Albertsons’ shareholders, associates and consumers,” Tom Moriarty, Albertsons’ general counsel, said in a statement.

Kroger said it disagrees with Albertsons “in the strongest possible terms.” He said Wednesday morning that Albertsons was responsible for “repeated intentional material violations and interference throughout the merger process.”

Shares of Albertsons rose more than 2% at the open, while shares of Kroger rose slightly.