Kroger’s $25bn North American grocery mega-merger with Albertsons has been called off after Albertsons terminated the merger and vowed to sue its larger contemporary.
Two separate US courts, in Oregon and Washington, issued injunctions over the proposed merger this week over competition fears, leading to Albertsons exercising its right to end the agreement.
“Given the recent federal and state court decisions to block our proposed merger with Kroger, we have made the difficult decision to terminate the merger agreement,” said Albertsons CEO Vivek Sankaran. “We are deeply disappointed in the courts’ decisions.”
Albertsons also announced it has filed a lawsuit against Kroger, bringing claims for “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, as was required of Kroger under the terms of the merger agreement between the parties.
Kroger responded that Albertsons’ claims were “baseless and without merit”.
It stated: “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.
“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.”
The deal, announced in 2022, would have created one of North America’s largest grocery chains, with more than 5,000 stores and 4,000 retail pharmacies.
However, in February the US Federal Trade Commission challenged the “largest supermarket merger in US history”, arguing it would “eliminate competition and raise grocery prices for millions of Americans, while harming tens of thousands of workers”.
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