Albertsons Pulls Out of $25B Merger with Kroger, Then Sues

NEW YORK, NY — Albertsons has canceled its $25 billion merger with Kroger, ending the largest proposed supermarket merger in U.S. history.

The decision comes just one day after two federal court rulings blocked the deal, with concerns that the merger would harm competition in the grocery industry.

In a statement released Wednesday, Albertsons CEO Vivek Sankaran said the company had made the “difficult decision” to terminate the merger, which was first announced in 2022. The merger aimed to combine the fifth and tenth largest grocery retailers in the country, with both companies owning several well-known chains, including Safeway, Vons, Harris Teeter, and Fred Meyer.

The deal faced major opposition from regulators, including the Federal Trade Commission, which argued that the merger would lead to higher consumer prices and lower worker wages. The FTC also criticized the proposed plan to sell 579 stores to C&S Wholesale Grocers, saying the company wouldn’t be able to handle such a large number of stores.

Along with pulling out of the merger, Albertsons is suing Kroger, accusing the company of failing to do enough to secure approval.

According to Albertsons, Kroger didn’t follow through on certain aspects of the merger agreement, such as divesting the necessary assets and rejecting stronger buyers for the stores they planned to sell. Albertsons claims Kroger’s actions hurt its shareholders, workers, and customers.

“Kroger’s self-serving conduct, taken at the expense of Albertsons and the agreed transaction, has harmed Albertsons’ shareholders, associates, and consumers,” said Albertsons’ general counsel, Tom Moriarty.

Kroger, however, strongly disagrees with the allegations. In a statement, the company argued that Albertsons was responsible for "repeated intentional material breaches" and interference during the merger process.

After the news broke, Albertson's shares increased by more than 2%, while Kroger’s stock slightly increased. Despite the setback, both companies are expected to continue looking for other ways to stay competitive in the retail market, where they face strong competition from major players like Walmart, Amazon, and Costco.