What Albertsons is claiming
Albertsons told the Delaware Chancery Court on Monday that Kroger owes more than $9 billion for the breakdown of what would have been the biggest US grocery merger ever. The company is asking Judge Lori Will to find that Kroger "willfully" violated the agreement by failing to use "best efforts" to secure regulatory clearance, including what Albertsons describes as a refusal to adjust its divestiture plan. According to the filing, Kroger had agreed "to remove any antitrust impediment to the merger - with no limit except that Kroger did not have to divest more than 650 stores," and "Kroger willfully breached these maximalist contractual commitments. Kroger wanted the Merger but only on its own terms."
The money at stake
Albertsons is seeking more than $9.3 billion, which it says covers the premium stockholders would have received if the deal closed, a $600 million termination fee, and $75 million for interest and other costs. If it wins, shareholders would benefit. The grocer's largest investor is Cerberus Capital Management, which held a stake of more than 30% at the end of June. In a statement, Albertsons said, "The bottom line is that Kroger made a promise and broke it," adding that Kroger should be held accountable for harm to shareholders, associates, and customers, and that it looks forward to proving its case in court.
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How the deal fell apart
Kroger, the biggest US grocer, agreed to buy No. 2 Albertsons in a bid to better compete against Amazon.com, Walmart, and other non-unionized rivals. To win over regulators, the firms offered to divest a few hundred locations to C&S Wholesale Grocers Inc. However, in December 2024 a federal judge halted the transaction, agreeing with the US Federal Trade Commission's view that the proposed divestitures fell short of resolving antitrust issues. Afterward, Albertsons canceled the deal and filed suit against Kroger, asserting it put pre-merger profit goals ahead of the steps needed for approval and declined to divest assets regulators had deemed vital for the selected buyer to succeed. Albertsons says Kroger "stuck to its failing lowball strategy right through the litigation that ended the deal."
What this means for your portfolio
Kroger maintains it did everything possible to get the deal cleared and accuses Albertsons of undermining its divestiture proposal by secretly working with C&S to push regulators to require more store sales than necessary. C&S stated that every interaction it had with Kroger, Albertsons, and regulators complied with its contractual, legal, and ethical duties and was focused on securing approval. A Kroger spokesperson did not offer an immediate comment. The upcoming trial will test whether Albertsons can collect the more than $9.3 billion it seeks - a potential swing that could matter if you own shares in either grocer.
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