Albertsons has decided to abandon its merger plan with Kroger, filing a lawsuit against the grocery giant. The complaint states that Kroger did not make sufficient efforts to obtain regulatory approval for their proposed $24.6 billion merger.
This decision follows recent court rulings, where two judges halted the merger. U.S. District Court Judge Adrienne Nelson issued a temporary injunction blocking the deal after a lengthy hearing in Portland, Oregon. Shortly after, Judge Marshall Ferguson in Seattle provided a permanent injunction, citing concerns that the merger would reduce competition and violate consumer protection laws in the state.
The merger between Kroger and Albertsons, which was proposed last year, was set to be the largest grocery store merger in U.S. history. The companies claimed that joining forces would allow them to compete more effectively against major players like Walmart and Amazon.
As part of the merger terms, Kroger and Albertsons intended to sell 579 stores in areas where they have overlapping locations to C&S Wholesale Grocers, a company that supplies independent supermarkets.
However, the Federal Trade Commission (FTC) intervened, arguing that the merger would lead to higher prices and lower wages for workers due to reduced competition. The FTC expressed doubts about the effectiveness of the proposed divestiture plan and raised concerns about C&S’s capacity to manage the additional stores.
In its lawsuit, Albertsons accused Kroger of failing to take necessary actions to ensure regulatory approval, such as divesting the required assets and responding to feedback from regulators. Albertsons claimed that Kroger was not cooperative and made decisions that jeopardized the merger’s success.
Albertsons’ general counsel, Tom Moriarty, stated that Kroger’s actions have harmed shareholders, associates, and consumers. In response, Kroger expressed strong disagreement, claiming that Albertsons was responsible for multiple breaches during the merger process.
Following the news, Albertsons’ stock saw an increase of over 2% at the market’s opening, while Kroger’s shares also experienced a slight uptick.
