Albertsons Companies has filed a lawsuit against The Kroger Co, claiming that the latter “willfully” breached their merger agreement.
Albertsons said Kroger failed to exercise “best efforts” and to take “any and all actions” to secure regulatory approval of the transaction.
Kroger repeatedly refused to divest assets necessary for antitrust approval, ignored regulators’ feedback, and rejected stronger divestiture buyers, Albertsons added.
“Rather than fulfill its contractual obligations to ensure that the merger succeeded, Kroger acted in its own financial self-interest, repeatedly providing insufficient divestiture proposals that ignored regulators’ concerns,” said Tom Moriarty, Albertsons’ general counsel and chief policy officer.
“Kroger’s self-serving conduct, taken at the expense of Albertsons and the agreed transaction, has harmed Albertsons’ shareholders, associates and consumers,” he continued.
Albertsons is seeking billions of dollars in damages to recover for “the time, energy and resources it invested in good faith”.
In a separate statement, Albertsons said it has exercised its right to terminate its merger agreement with Kroger.
CEO Vivek Sankaran said the company will start its next chapter in strong financial condition and will accelerate its Customers for Life strategy to boost long-term growth. For FY24, the firm expects identical sales to grow 1.8 per cent to 2.2 per cent.
The lawsuit came after federal and state judges blocked the $24.6 billion merger between the two companies due to competition concerns.
In response, Kroger said Albertsons’ claims are “baseless and without merit” and that it will refute the allegations “in the strongest possible terms”.
“This is clearly an attempt to deflect responsibility following Kroger’s written notification of Albertsons’ multiple breaches of the agreement, and to seek payment of the merger’s break fee, to which they are not entitled.
“Kroger looks forward to responding to these baseless claims in court. We went to extraordinary lengths to uphold the merger agreement throughout the entirety of the regulatory process and the facts will make that abundantly clear,” the company said in a statement.
Korger added it remains confident in its ability to drive sustainable growth, with management evaluating the next steps to serve the best interests of customers, associates and shareholders.
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