Rodney McMullen told Delaware Chancery Court Judge Lori Will that Kroger fulfilled its obligations to try to win regulatory sign-off, but the Federal Trade Commission under Lina Khan opposed mergers broadly, and the transaction "was just doomed from the beginning, unfortunately." He said he kept his involvement in store selection limited, asking about five stores, insisting on no changes, and relying on antitrust counsel to shape the divestiture package. He added Kroger would have sold up to 650 stores if the FTC had required it.
McMullen also said he personally negotiated the $600 million termination fee and the 650-store cap directly with Stephen Feinberg, the former CEO of Cerberus Capital Management, which is Albertsons' largest shareholder. He defended his responsiveness to Albertsons by noting he assigned questions to Kroger executives with deeper expertise when needed.
Albertsons ended the merger after a federal court blocked it in December 2024 and sided with the FTC. In its lawsuit, Albertsons asserts Kroger didn't propose an adequate divestiture bundle to win approval to join more than 4,000 stores, prioritizing internal profit targets instead. A day before McMullen's appearance, former Albertsons CEO Vivek Sankaran testified that Kroger did not exhaust every option to secure approval and that McMullen became less responsive as regulatory hurdles grew.
Kroger contends it poured more than $1 billion into pursuing the transaction and defending against antitrust suits. The companies argued the combination would help them compete more effectively with Amazon.com Inc., Walmart Inc. and others. To address antitrust concerns, C&S Wholesale Grocers Inc. was designated to acquire hundreds of locations, with the overall number of required divestitures capped at 650.
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Albertsons is asking for more than $9.3 billion. That amount covers a $600 million termination fee along with interest and costs, plus more than $8 billion that Albertsons describes as the foregone premium shareholders would have received from the merger and the associated taxes. To obtain damages, Albertsons has to demonstrate that Kroger knowingly breached the merger agreement and is further attempting to show those alleged breaches reduced the likelihood of closing.
A lawyer for Albertsons pressed McMullen on how much sway he had over the divestiture package, citing instances where he weighed financial details for certain stores. McMullen maintained he had a limited role and did not demand changes.
Judge Will is presiding over a trial to determine whether Kroger bears responsibility for the merger's failure. The docket lists the matter as Albertsons v. Kroger, 2024-1276, in the Court of Chancery, State of Delaware.
One more item on risk screens: McMullen stepped down in March 2025 following a board probe into his personal conduct. He testified his departure was unrelated to the merger or his performance, and the judge previously blocked Albertsons from obtaining Kroger's internal records on that issue. The bottom line for your portfolio: the ruling could influence potential payouts and how grocers design future deals in a tougher antitrust environment.
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