The supermarket chains are preparing for an Oct. 19 trial in Delaware, with Albertsons accusing Kroger of breaching its obligations to secure regulatory approval and Kroger denying responsibility for the deal’s collapse.
Albertsons Cos. is seeking more than $9.3 billion from The Kroger Co. over the collapse of their proposed $24.6 billion merger, escalating a legal dispute between the supermarket operators ahead of a trial scheduled to begin Oct. 19 in Delaware.
In court filings submitted Oct. 12, Albertsons accused Kroger of willfully breaching the companies’ merger agreement by failing to make sufficient efforts to secure regulatory approval, particularly in developing a plan to divest hundreds of supermarkets to C&S Wholesale Grocers.
Kroger disputes the allegations and maintains that it fulfilled its contractual obligations. The Cincinnati-based retailer contends that regulatory opposition made the transaction impossible to complete despite its efforts to obtain approval.
The dispute will be heard in Delaware Chancery Court before Vice Chancellor Lori Will. A two-week bench trial is scheduled to begin Oct. 19.
Albertsons Challenges Kroger’s Divestiture Strategy
Albertsons argues that Kroger failed to honor provisions of the merger agreement requiring it to use its best efforts to overcome antitrust objections.
According to Albertsons, the agreement obligated Kroger to take necessary steps to obtain regulatory clearance, subject to a limitation that it would not be required to divest more than 650 stores.
Albertsons alleges that Kroger resisted changes to the proposed divestiture package despite concerns raised by regulators, advisers and C&S Wholesale Grocers, which had agreed to acquire hundreds of stores as part of the transaction.
The Boise, Idaho-based retailer maintains that Kroger prioritized financial performance targets for the combined company over modifications that could have improved the merger’s prospects for regulatory approval.
Albertsons is seeking compensation for the merger premium its shareholders would have received had the transaction closed, along with a $600 million termination fee, approximately $75 million in interest and additional costs.
In a statement, Albertsons said Kroger had broken its commitments and should be held responsible for the resulting harm to shareholders, employees and customers.
Kroger Rejects Claims
Kroger maintains that it acted in good faith and devoted substantial financial and operational resources to completing the transaction.
In its own court filing, Kroger said it spent more than $1 billion pursuing the merger and relied on antitrust counsel when developing the proposed store divestitures.
The company argues that satisfying regulators would have required selling more than the 650-store maximum established under the merger agreement.
Kroger has also accused Albertsons of undermining the regulatory process by working with C&S to encourage demands for additional divestitures. Albertsons disputes Kroger’s account, while C&S has maintained that its communications with the companies and regulators were appropriate.
Kroger contends that Albertsons is not entitled to the termination fee or additional damages.
Failed Merger Returns to Court
Kroger announced its agreement to acquire Albertsons in October 2022, proposing to combine two of the nation’s largest traditional supermarket operators to strengthen their competitive position against Walmart, Amazon, Costco and other retailers.
The transaction encountered opposition from federal and state antitrust authorities concerned that consolidation would reduce supermarket competition and potentially increase grocery prices.
In December 2024, a federal judge in Oregon blocked the merger following a challenge by the Federal Trade Commission. A Washington state court also ruled against the transaction.
Albertsons subsequently terminated the agreement and filed suit against Kroger.
The upcoming trial will focus on whether Kroger complied with its contractual obligations to pursue regulatory approval and whether Albertsons is entitled to financial compensation.
The outcome could have significant implications for the financial exposure companies face when major retail mergers fail to obtain regulatory clearance.