Traders work as screens display the trading information for Kroger Co. and Albertsons Companies Inc. on the floor of the New York Stock Exchange, Oct. 14, 2022.
Brendan McDermid | Reuters
Albertsons on Wednesday formally terminated its proposed $25 billion merger with Kroger and filed a lawsuit against its supermarket competitor, saying Kroger violated its contract and didn’t follow through on commitments to help get the deal approved.
It comes a day after a judge blocked the planned tie-up.
In a news release, Albertsons said Kroger broke its merger agreement “by repeatedly refusing to divest assets necessary for antitrust approval, ignoring regulators’ feedback, rejecting stronger divestiture buyers and failing to cooperate with Albertsons.”
“Kroger’s self-serving conduct, taken at the expense of Albertsons and the agreed transaction, has harmed Albertsons’ shareholders, associates and consumers,” Albertsons’ General Counsel and Chief Policy Officer Tom Moriarty said in a statement. “We are disappointed that the opportunity to realize the significant benefits of the merger has been lost on account of Kroger’s willfully deficient approach to securing regulatory clearance.”
In a statement, Kroger called the allegations in the lawsuit “baseless and without merit.”
“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,” the company’s statement said.
For the two grocery rivals, which had been on track to marry their numerous supermarket banners, the lawsuit amounts to a corporate divorce battle. The companies are at odds about who should pay for the legal fees associated with the merger and who, if anyone, is responsible for paying a breakup fee.
Albertsons in its news release said it is owed both a $600 million termination fee and “relief reflecting the multiple years and hundreds of millions of dollars it devoted to obtaining approval for the merger, along with the extended period of unnecessary limbo Albertsons endured as a result of Kroger’s actions.”
Kroger, on the other hand, pushed back against payments to Albertsons in its statement and said it “looks forward to responding to these baseless claims in court.”
Shares of Albertsons and Kroger were up about 1% and 2%, respectively, in early trading Wednesday.
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