Kroger Counters Albertsons’ Lawsuit Over Failed Merger

Kroger is pushing back against a lawsuit from Albertsons Cos. over their unsuccessful $24.6 billion merger, intensifying a legal battle that followed the deal’s collapse under regulatory scrutiny. The lawsuit, which seeks billions of dollars, including a $600 million termination fee, is based on baseless accusations, Kroger argued in a recently unsealed court filing, according to Bloomberg.

Albertsons initiated the lawsuit after antitrust concerns led U.S. regulators to block the deal. According to Bloomberg, Kroger claims that Albertsons, under pressure from its largest shareholder, Cerberus Capital Management, is attempting to extract funds to address its financial struggles. Kroger further alleged that Cerberus is using the lawsuit as a means to secure a return on its long-term investment in Albertsons.

Kroger is now seeking damages from Albertsons to recover the costs incurred while attempting to obtain regulatory approval, though the specific amount remains undisclosed. Meanwhile, Albertsons maintains that Kroger failed to fulfill its contractual obligations under the merger agreement and is using its legal response as a distraction. A spokesperson for Albertsons asserted that the company was fully committed to the deal’s success and looks forward to proving its claims in court, per Bloomberg.

The proposed merger, announced two years ago, was aimed at strengthening Kroger’s position against major competitors like Amazon.com Inc. and Walmart Inc. The companies had also agreed to divest several hundred stores to C&S Wholesale Grocers Inc. in an effort to appease regulators. However, the U.S. Federal Trade Commission challenged the plan, arguing that the store sales would not adequately maintain competition.

Related: Albertsons Sues Kroger After Courts Block $24.6 Billion Merger

A federal judge ruled against the deal in December, stating that the proposed divestitures would not be sufficient to offset competitive harm. Following the ruling, Albertsons moved to terminate the agreement and subsequently filed its lawsuit, accusing Kroger of failing to make the necessary efforts to secure approval.

Albertsons alleges that Kroger deliberately violated the terms of their agreement by refusing to sell off assets crucial for regulatory clearance and disregarding feedback from authorities. Kroger, however, contends that it explored all possible avenues to close the deal, including filing appeals and engaging with incoming regulators.

Kroger also accused Albertsons of taking actions that actively undermined their chances of gaining approval. According to Bloomberg, the filing claims that Albertsons worked behind the scenes with C&S to push for the divestiture of additional stores, a move Kroger argues was intended to strengthen the merger’s prospects. Instead, regulators viewed C&S as an inadequate buyer, which ultimately led to the deal’s rejection.

Source: Bloomberg