Albertsons is abandoning its merger with Kroger and suing the grocery chain, saying it didn’t do enough to gain regulatory approval for the $24.6 billion deal.
The move comes a day after two judges ruled out the merger in separate court cases. U.S. District Court Judge Adrienne Nelson issued a preliminary injunction blocking the merger on Tuesday after holding a three-week hearing in Portland, Oregon. An hour later, Judge Marshall Ferguson of Seattle issued a permanent injunction barring the merger in Washington after finding it would reduce competition in the state and violate consumer protection laws.
Kroger and Albertsons have proposed what would be the largest grocery store merger in U.S. history in 2022. The companies said a merger would help them better compete with big retailers like Walmart, Costco and Amazon.
Kroger is the parent company of Chicago-area grocery chain Mariano’s, while Albertsons is the parent company of regional grocery mainstay Jewel-Osco.
Under the terms of the merger agreement, Kroger and Albertsons – which compete in 22 states – agreed to sell 579 stores in locations where their locations overlap to C&S Wholesale Grocers, an independent supermarket supplier based in New Hampshire and which also owns the Grand Union and Piggly Wiggly stores. brands.
But the Federal Trade Commission sued to block the merger earlier this year, saying it would raise prices and lower workers’ wages by eliminating competition. He also said the divestment plan was inadequate and that C&S was not equipped to take over so many stores.
On Wednesday, Albertsons said Kroger had failed to make “best efforts” and had not taken “any action” to obtain regulatory approval for the companies’ agreed-upon merger transaction.
Albertsons said Kroger refused to divest assets necessary for antitrust approval, ignored feedback from regulators and rejected stronger buyers.
Kroger deliberately violated the merger agreement in several key ways, including repeatedly refusing to divest assets necessary for antitrust approval, ignoring feedback from regulators, rejecting stronger buyers, and failing to cooperate with Albertsons.
“Kroger’s self-serving conduct, taken at the expense of Albertsons and the agreed-upon transaction, harmed Albertsons’ shareholders, associates and consumers,” Tom Moriarty, general counsel for Albertsons, said in a statement.
Kroger said it disagrees with Albertsons “in the strongest possible terms.” He said Wednesday morning that Albertsons was responsible for “repeated intentional material violations and interference throughout the merger process.”
Albertsons shares were up more than 2% at the open, while Kroger shares were up slightly.
