Albertsons Companies has moved to end its merger agreement with Kroger after the U.S. District Court in Oregon and the King County Superior Court for the State of Washington issued injunctions with respect to the proposed merger.
“Given the recent federal and state court decisions to block our proposed merger with Kroger, we have made the difficult decision to terminate the merger agreement. We are deeply disappointed in the courts’ decisions,” Albertsons’ CEO Vivek Sankaran said in a statement.
Sankaran continued, “We start this next chapter in strong financial condition with a track record of positive business performance. Over the last two years, we have invested in our core business and in new sources of revenue, while enhancing our capabilities through the rollout of new technologies. All of this has been built on a rich asset base, including our beloved brands in premium locations with substantial real estate value. These assets provide us the opportunity to optimize the acceleration of our Customers for Life strategy and other value-creating initiatives. We are excited about our agenda to create long-term value and are committed to returning cash to our stockholders both in the near term and in the future. We will be providing additional details on our plan no later than our earnings conference call in January 2025.”
As reported, the proposed $24.6 billion was blocked by courts in Oregon and Washington this week.
Both Kroger and Albertsons released statements saying that they are disappointed in the decision. In a statement to the media, Kroger said:
“Through its proposed merger with Albertsons, Kroger would invest more than $1 billion in lower grocery prices, invest an additional $1 billion in higher grocery worker wages, and invest an additional $1.3 billion to improve Albertsons stores. Kroger is disappointed in the opinions issued by the U.S. District Court for the District of Oregon and the Washington State Court, which overlook the substantial evidence presented at trial showing that a merger between Kroger and Albertsons would advance the company’s decades-long commitment to lowering prices, respecting collective bargaining agreements, and is in the best interests of customers, associates, and the broader competitive environment in a rapidly evolving grocery landscape.”
If approved, the merger would have been the largest supermarket consolidation in U.S. history.
The FTC, which has opposed the merger since its announcement, applauded the rulings.
“The FTC, along with our state partners, scored a major victory for the American people, successfully blocking Kroger’s acquisition of Albertsons,” according to a statement by the FTC’s Bureau of Competition Director Henry Liu.
“This historic win protects millions of Americans across the country from higher prices for essential groceries—from milk, to bread, to eggs—ultimately allowing consumers to keep more money in their pockets,” according to the statement. “This victory has a direct, tangible impact on the lives of millions of Americans who shop at Kroger or Albertsons-owned grocery stores for their everyday needs, whether that’s a Fry’s in Arizona, a Vons in Southern California, or a Jewel-Osco in Illinois.
“This is also a victory for thousands of hardworking union employees, protecting their hard-earned paychecks by ensuring Kroger and Albertsons continue to compete for workers through higher wages, better benefits, and improved working conditions.”
Meanwhile, after the court rulings, Albertsons filed lawsuit against Kroger for breach of merger agreement, stating that Kroger refused to offer an adequate divesture package and repeatedly ignored regulators’ concerns, which Albertsons claimed caused the merger deal to be blocked.
Kroger countered that the lawsuit is baseless and without merit.
“Kroger refutes these allegations in the strongest possible terms, especially in light of Albertsons' repeated intentional material breaches and interference throughout the merger process, which we will prove in court,” according to a Kroger statement.
“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.
“We are confident in Kroger's value creation model to drive sustainable growth. Kroger's Board of Directors is currently evaluating next steps that serve the best interests of Kroger's customers and associates, and create value for shareholders.”
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