Albertsons Takes Legal Action Against Kroger Following Blockade of $24.6B Merger by Oregon and Washington Judges

In a dramatic turn of events, Albertsons has terminated its $24.6 billion merger agreement with Kroger, following legal setbacks from a federal judge in Oregon and a state judge in Washington. This decision comes just a day after judges halted the merger, siding with the Federal Trade Commission and several states that argued the deal would significantly harm competition.

The Delaware Court of Chancery is now the setting for a lawsuit filed by Albertsons against Kroger. The grocery chain, operating 24 Albertsons locations and 97 Safeway stores in Oregon, claims Kroger failed to secure essential regulatory approvals while pursuing the merger, which was first announced in 2022.

Earlier this year, the Federal Trade Commission and officials from seven states, including Oregon, initiated legal proceedings to block the merger. Both judges cited concerns about the potential for higher prices and lower-quality goods affecting consumers, along with detrimental impacts on grocery workers’ wages.

Details of Albertsons’ complaint have not been disclosed publicly, but the company accused Kroger of deliberately ignoring regulatory feedback, failing to divest necessary assets, and not collaborating adequately to facilitate the merger’s approval.

Kroger, which operates 51 Fred Meyer stores and four QFC locations in Oregon, previously agreed to sell off 579 stores nationwide in a bid to ease regulatory concerns. Tom Moriarty, general counsel for Albertsons, expressed disappointment over the merger failing, attributing the setback solely to what he described as Kroger’s self-interest, which he says has jeopardized stakeholders’ and consumers’ interests.

Albertsons seeks an immediate $600 million termination fee and additional damages, claiming that Kroger’s lack of cooperation has resulted in substantial financial losses.

In response, Kroger has labeled Albertsons’ allegations as “baseless,” asserting that it was Albertsons that breached the merger agreement numerous times during the process. Kroger insists it made considerable efforts to comply with the terms of the agreement and looks forward to contesting Albertsons’ claims in court.

Oregon officials, including Attorney General Ellen Rosenblum and Senator Ron Wyden, have voiced their approval of the merger’s collapse. Wyden stated the deal would have adversely affected grocery prices and accessibility to pharmacies, further complicating the economic challenges faced by Oregonians.