Albertsons and Kroger Merger Agreement Terminated, Lawsuit Ensues

Albertsons Companies, Inc. has terminated its merger agreement with Kroger and filed suit against its former potential collaborator today for breach of said agreement after the US District Court in Oregon and the King County Superior Court for the State of Washington issued injunctions regarding the proposed merger.

Albertsons Vivek Sankaran, CEO, said, “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 claims that Kroger engaged in willful breach of contract and breach of covenant of good faith and fair dealing after the latter reportedly failed to offer an adequate divesture package and did not secure regulatory approval, as was required by the terms of the agreement.

Tom Moriarty, Albertsons’ General Counsel and Chief Policy Officer, said: “A successful merger between Albertsons and Kroger would have delivered meaningful benefits for America’s consumers, Kroger’s and Albertsons’ associates and communities across the country. 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. Kroger’s self-serving conduct, taken at the expense of Albertsons and the agreed transaction, has harmed Albertsons’ shareholders, associates and consumers. We are disappointed that the opportunity to realize the significant benefits of the merger has been lost on account of Kroger’s willfully deficient approach to securing regulatory clearance.”

According to a company announcement, Albertsons is seeking billions of dollars in damages from Kroger to protest the interests of its shareholders, associates and customers.

Albertsons’ termination of the agreement also entitles them to an immediate $600 million termination fee and removes contractual constraints on Albertsons’ ability to pursue other strategic opportunities.

Kroger has issued its own statement about Albertsons’ claims:

“Albertsons’ claims are 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.

 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.

 We are incredibly proud of the Kroger team for how they worked through the merger process with the highest degree of integrity and commitment.

 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.”