Albertsons Companies (ACI) has officially terminated its planned $25 billion acquisition by Kroger (KR) after two courts decided to block the agreement. The grocery chain also initiated legal action against Kroger, accusing it of failing to secure necessary regulatory approval. Recently, a federal judge in Oregon ruled against the merger, with the King County Superior Court of Washington issuing a similar verdict. "In light of the recent federal and state court rulings blocking our proposed merger with Kroger, we have made the challenging decision to terminate the merger agreement," stated Albertsons Chief Executive Vivek Sankaran on Wednesday.
"We are profoundly disappointed in the decisions made by the courts." In the market, Kroger's shares experienced a 0.8% increase during midday trading, while Albertsons saw a decline of 0.2%. In October 2022, Kroger had reached an agreement to acquire Albertsons for a total consideration of $34.10 per share, with expectations for the deal to close in early 2024.
However, in February 2024, the Federal Trade Commission raised concerns about the merger, claiming it could eliminate competition and elevate grocery prices. On Wednesday, Albertsons filed a lawsuit against Kroger, alleging "willful breach of contract" due to Kroger's inability to obtain regulatory approval.
Albertsons seeks "billions of dollars in damages" for not being able to explore other business opportunities during the merger negotiations. Tom Moriarty, Albertsons' general counsel and chief policy officer, commented, "Kroger’s self-serving actions, which have come at the expense of Albertsons and the agreed transaction, have negatively impacted Albertsons' shareholders, employees, and consumers." In response, Kroger dismissed Albertsons' claims as "baseless and without merit." Kroger issued a statement on its website, asserting that it would vigorously contest these allegations, particularly given Albertsons' alleged intentional material breaches and interference throughout the merger negotiations.
"This is an attempt to shift responsibility following Kroger's notification of Albertsons' various breaches of contract, and to claim payment of the merger’s break fee, which they are not entitled to," Kroger concluded..