Albertsons cancels US$25B merger with Kroger, files lawsuit over breached agreement

USA – Albertsons has officially terminated its proposed US$25 billion merger with Kroger and initiated legal action against the grocer over alleged violations of the merger agreement. 

The decision follows rulings by two U.S. courts that blocked the deal due to antitrust concerns.  

Albertsons alleges that Kroger failed to meet its obligations under the merger terms, accusing the company of not exerting “best efforts” or taking “any and all actions” to secure regulatory approval for the transaction. 

In its lawsuit, Albertsons claims that Kroger “willfully” breached the agreement by refusing to divest assets as required for antitrust clearance, ignoring feedback from regulators, rejecting stronger divestiture buyers, and failing to cooperate with Albertsons. 

Kroger has refuted these allegations, calling them “baseless and without merit.”  

A Kroger spokesperson responded in a statement, saying, “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.” 

Albertsons is seeking a US$600 million termination fee and reimbursement for resources expended during the merger process. Kroger has stated its intention to defend itself against these claims in court. 

The merger, first announced in 2022, aimed to create the second-largest food retailer in the U.S., with combined sales exceeding US$200 billion.  

Both companies argued the deal would enhance their ability to compete against retail giants like Walmart, Costco, and Amazon. 

However, the Federal Trade Commission (FTC) filed a lawsuit earlier this year to block the merger, citing concerns that it would harm competition, increase grocery prices, and negatively impact employees.  

Regulators described Albertsons and Kroger as direct competitors in many markets, closely monitoring each other’s pricing, store operations, and product quality. 

Amid the fallout, Albertsons has announced plans to raise its quarterly dividend by 25%, increasing it to US$0.15 per share. The company is also moving forward with a US$2 billion share repurchase program. 

Kroger runs many familiar grocery stories, including Ralphs, Harris Teeter, Fred Meyer and King Soopers. Albertsons, which owns Safeway and Vons, is now expected to explore new buyers. 

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