Cincinnati-based Kroger Tuesday filed a countersuit against Albertsons, the latest legal fallout from a failed merger between the two grocery giants.
Albertsons filed suit against Kroger after the $24.6 billion merger fell apart in December 2024 over antitrust concerns. Albertsons says Kroger didn't work hard enough to get federal approval for the merger and owes a $600 million termination fee stipulated in the initial merger agreement, plus billions in damages.
Kroger, on Tuesday, pushed back, accusing Albertsons executives of plotting with C&S Wholesale Grocers and secretly pursuing a separate strategy for regulatory approval that undermined Kroger's. C&S was lined up to buy hundreds of stores from Kroger to allay antitrust concerns. Kroger claims Albertsons convinced C&S to criticize its deal with Kroger, giving federal regulators pause.
"Albertsons's misconduct shockingly came to light in the middle of the antitrust trials under government cross examination of Susan Morris, Albertsons's recently promoted CEO designate," Kroger said in a news release. "As a result of its misconduct, Albertsons is not entitled to the $600 million termination fee under the terms of the parties' merger agreement, nor is Albertsons entitled to the other damages it seeks."
Kroger and Albertsons first agreed to the merger in 2022. The Federal Trade Commission and attorneys general in eight states and the District of Columbia sued to oppose the deal claiming it would hurt competition and raise prices. Ohio Attorney General Dave Yost and AGs in three other states filed briefs supporting the merger.
Had the deal gone through, it would have been the largest supermarket merger in U.S. history.
In its filing Tuesday, Kroger claimed Albertsons was preparing to abandon the deal and sue Kroger prematurely.
"Kroger was prepared, in the event of adverse court decisions, to pursue all remaining options to close the merger," the company said. "But, within hours of the court decisions blocking the merger, Albertsons terminated the merger agreement and filed a 140-page complaint against Kroger. These actions ensured that the merger would never close, and further demonstrated that Albertsons had long before shifted its focus towards the litigation that is now pending between the parties, abandoning its contractual obligation to use best efforts to close the transaction."
Kroger's rebuttal reverses charges Albertsons made against the company in its lawsuit.
In that suit, filed Dec. 11, 2024, Albertsons accused Kroger of failing to take regulators' antitrust concerns seriously, refusing to sell enough of its stores to win regulatory approval and not collaborating with Albertsons on winning approval for the deal.
In its countersuit, Kroger is seeking unspecified damages and to recoup expenses it incurred trying to win regulatory approval for the merger.
Albertsons released a statement responding to Kroger's suit:
"Kroger’s weak claims 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 statement reads. "Albertsons was steadfastly committed to the success of the combination from the outset. By contrast, Kroger did not hold up its end of the bargain, despite its duty under the Merger Agreement to take 'any and all actions' to address regulatory concerns. As highlighted by multiple judges in the decisions blocking the merger, Kroger – under the leadership of former CEO Rodney McMullen – acted in its own financial self-interest, proposing insufficient divestiture packages that repeatedly ignored regulators’ concerns, mismanaging the process of identifying a divestiture buyer, and failing to cooperate with Albertsons. Kroger’s self-interested conduct doomed the merger, and we are now focused on returning value to Albertsons’ shareholders to compensate for those losses. We look forward to presenting our case in court.”
This story has been updated with a statement from Alberstons.