Albertsons demands billions from rival Kroger after terminating merger bid
(Reuters) - Albertsons (NYSE:ACI ) on Wednesday terminated its $25 billion bid to merge with Kroger (NYSE:KR ) after courts blocked the deal and sued its rival, alleging a breach of contract that led to the deal's demise.
The formal termination ends a two-year long effort by the chains to combine that regulators argued would lead to higher prices for shoppers. Albertsons said it was suing due to Kroger's failure to take "any and all actions" to get the deal approved.
Albertsons is seeking billions of dollars in damages along with the $600 million termination fee. Kroger did not immediately respond to a request for comment on the lawsuit.
"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," Albertsons CEO Vivek Sankaran said.
Two different courts blocked the deal on Tuesday, siding with the Federal Trade Commission, which moved to stop the deal, and argued in a trial that the merger would eliminate competition between the traditional grocery chains, causing higher prices and reducing leverage for unionized workers.
The deal became a symbol of surging grocery costs. U.S. food prices have risen by 25% over the last four years, and while food inflation is showing signs of cooling in 2024, grocery bills remain a concern for shoppers.
The FTC sued along with attorneys general from eight states and the District of Columbia. Colorado, like Washington, sued on its own to block the deal.
Kroger defended the proposed combination, saying it would bring prices down at Albertsons stores, where it said prices are 10-12% higher than its own. The merged company would fund price cuts through cost savings it expects from a larger operation, and a larger customer base to drive revenue for Kroger's data consulting business.
Albertsons shares were up 1.5% in premarket trading Wednesday, while Kroger was marginally lower.
Source: Investing.com
