Traders work while displaying the trading information for Kroger Co. and Albertsons Companies Inc. display on the floor of the New York Stock Exchange on October 14, 2022.
Brendan McDermid | Reuters
Albertsons formally terminated its proposed $25 billion merger on Wednesday Kroger and filed a lawsuit against its supermarket competitor, claiming Kroger breached its contract and failed to deliver on its commitments to get the deal approved.
It comes a day after a judge blocked the planned deal.
In a press release, Albertsons said Kroger breached the merger agreement “by repeatedly refusing to divest assets necessary for antitrust clearance, ignoring regulator feedback, rejecting stronger divestiture purchasers and failing to cooperate with Albertsons.”
“Kroger's selfish behavior, at the expense of Albertsons and the agreed upon transaction, has harmed Albertsons shareholders, employees and consumers,” Tom Moriarty, General Counsel and Chief Policy Officer of Albertsons, said in a statement. “We are disappointed that the opportunity to realize the significant benefits of the merger was lost due to Kroger's deliberately flawed approach to obtaining regulatory approval.”
In a statement, Kroger called the allegations in the lawsuit “baseless and baseless.”
“This is clearly an attempt to deflect responsibility following Kroger's written notice of Albertsons' multiple violations of the agreement and to demand payment of the merger break fee, which they are not entitled to,” the company's statement said.
About two years ago, Kroger announced plans to buy Albertsons and join forces to fend off Walmart, Amazon And Costco. The deal would have brought nearly 40 supermarket chains, including Kroger's Fred Meyer and Albertsons' Safeway, under one company.
Wednesday's lawsuit amounts to a kind of divorce battle between companies.
The companies are at odds over who should pay legal fees related to the merger and who, if anyone, is responsible for paying the breakup fee.
Albertsons said in its press release that it is owed both a $600 million termination fee and “relief that reflects the many years and hundreds of millions of dollars it spent obtaining merger approval, along with the long period of unnecessary uncertainty that Albertsons has endured as a result of Kroger's actions.”
Kroger, on the other hand, opposed payments to Albertsons in its statement, saying it “looks forward to responding to these baseless claims in court.”
Shares of Albertsons and Kroger rose about 0.5% and 1%, respectively, in early trading Wednesday.