CINCINNATI — Kroger sued and filed counterclaims against Albertsons, following a failed merger between the two companies that was terminated in Dec. 2024.
According to a news release, Kroger alleges that while it was seeking regulatory approval to close the merger, Albertsons was focused on a secret campaign, alongside C&S Wholesale Grocers, the divestiture buyer, to pursue its own regulatory strategy. Kroger said this plan undermined its efforts.
Albertsons’ actions were revealed during the antitrust trials under government cross examination of Susan Morris, Albertson’s recently promoted CEO delegate. The company’s current CEO, Vivek Sankaran, will retire on May 1, 2025, which is when Morris will assume the role. Previously, Morris was Albertsons’ Executive Vice President and Chief Operations Officer.
Kroger said because of its “misconduct,” Albertsons is not entitled to a $600 million termination fee under the merger agreement or to the other damages it seeks.
“While Kroger was working diligently to seek regulatory approval and close the merger in accordance with the merger agreement, Albertsons executives (including Ms. Morris) were secretly working with C&S to supplant and undermine Kroger’s regulatory strategy,” Kroger said in a news release. “The misconduct included Ms. Morris’s secret communications with C&S’s CEO and others, utilizing personal emails and cell phones to advance Albertsons’s strategy.”
C&S criticized the divestiture package that they had agreed too, which led regulators to believe that they were an inadequate divestiture buyer. In court, those communications were cited before the merger was blocked.
Kroger’s counterclaims also look toward Albertsons’ “Plan B” to sue Kroger by creating a paper-trail that tracks back months, including allegations by Albertsons that go against their under-oath testimony given by executives during the antitrust trials.
“Kroger was prepared, in the event of adverse court decisions, to pursue all remaining options to close the merger,” the release continues. “But, within hours of the court decisions blocking the merger, Albertsons terminated the merger agreement and filed a 140-page complaint against Kroger.”
The company said this action was evidence of Albertsons having shifted its focus toward new litigation.
Kroger is seeking damages from Albertsons for its “misconduct and material breaches of the merger agreement,” the company said. It is now seeking to recover the investment made to obtain the regulatory approval for the merger.
An Albertsons spokesperson shared a statement from the company that reads:
“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. 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.”
