The legal battle between Kroger and Albertsons is heating up.
Kroger countersued Albertsons on Tuesday, denying claims that it was to blame for the collapse of the proposed $25 billion merger late last year.
Kroger said in a statement on Tuesday that it was “working diligently to seek regulatory approval and close the merger” and claimed that “Albertsons was engaging in a secret and misguided campaign, together with C&S Wholesale Grocers, the divestiture buyer, to pursue its own regulatory strategy, which ultimately undermined Kroger’s efforts.”
FEDERAL JUDGE BLOCKS KROGER’S $25B ACQUISITION OF ALBERTSONS
Kroger also argued that “as a result of its misconduct,” Albertsons isn’t entitled to the $600 million termination fee under the terms of the parties’ merger agreement as well as other damages it seeks.
“Kroger continues to capitalize on its business model, generating differentiated value for all stakeholders. This includes significant investments that are delivering lower prices and increasing wages, while further improving the experience for an expanding customer base,” the company continued.
Albertsons called Kroger’s recent claims “weak,” saying they are “a deliberate tactic to distract from its own ongoing executive leadership issues; blatant and recurring failures to carry out its contractual obligations under the Merger Agreement; and avoid paying the damages it owes to Albertsons.” The company also said it “was steadfastly committed to the success of the combination from the outset.”
Albertsons sued Kroger in December, shortly after a federal judge blocked the proposed merger between the companies, agreeing with the Federal Trade Commission (FTC) that the deal would undermine competition in the grocery industry.
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Albertsons argued that Kroger was in breach of contract for failing “to exercise ‘best efforts’ to secure regulatory approval of the companies’ agreed merger transaction” as was required of Kroger under the terms of the merger agreement between the parties.
U.S. District Judge Adrienne Nelson said that the plan put forward by the two companies to reduce grocery prices and divest more than 500 stores failed to address concerns about reduced competition in the sector and the impact it could have on consumers and workers.
Nelson’s ruling agreed with the FTC’s argument that the merger would remove direct competition between the two grocers, which would make it illegal.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| K | KELLANOVA | 82.44 | +0.05 | +0.06% |
| ACI | ALBERTSONS COMPANIES | 21.16 | +0.35 | +1.68% |
Albertsons and Kroger argued in legal filings and during the three-week trial in Portland, Oregon, that their plan to divest over 500 stores to C&S Wholesale Grocers would ensure that stores remain open and accessible to consumers, providing a counterbalance to the combined grocery store giant. Kroger also pledged to invest $1 billion in lowering grocery prices after its acquisition of Albertsons concluded.
FOX Business’ Eric Revell contributed to this report.
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