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Albertsons abandoned the $24.6 billion merger deal and filed a lawsuit against Kroger on Wednesday, the day after a federal judge in Oregon and a state judge in Washington barred a combination between two grocery titans.
The supermarket chain, which operates 97 Safeway shops and 24 Albertsons stores in Oregon, filed a lawsuit against Kroger in the Delaware Court of Chancery, claiming the larger retailer failed to obtain regulatory approval for planned 2022 acquisition of Albertsons.
Earlier this year, the Federal Trade Commission filed a lawsuit in U.S. District Court in Oregon, joined by seven states, including Oregon and the District of Columbia, to prohibit the merger. On Tuesday, a federal court in Portland temporarily delayed the merger. The merger was also stopped in Washington state by a state judge. Both justices concurred with state attorneys general and federal authorities that the merger would hurt consumers and grocery workers by reducing competition and providing consumers with worse-quality products at greater costs and workers with lower wages.
Although the Delaware court complaint Albertsons filed is not yet public, the company stated in a press release that Kroger willfully violated the terms of the merger agreement by ignoring regulators’ comments, refusing to sell assets required for antitrust approval or finding better buyers for the sold assets, and not working with Albertsons.
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In addition to four QFC restaurants in Portland, Kroger controls 51 Fred Meyer stores throughout Oregon. In an effort to appease authorities worried about a monopoly, Kroger and Albertsons had agreed to sell 579 locations nationwide, including dozens in Oregon, prior to the merger’s collapse.
In a statement, Tom Moriarty, general counsel and chief policy officer at Albertsons, claimed that although the combination would have benefited consumers, Kroger instead acted in its own financial self-interest.
According to Moriarty, Kroger’s self-serving actions have hurt Albertsons’ shareholders, associates, and customers at the expense of Albertsons and the agreed-upon agreement. We regret that Kroger’s purposefully inadequate strategy for obtaining regulatory permission has cost us the chance to reap the substantial benefits of the transaction.
According to the statement, Albertsons is requesting an immediate $600 million termination fee in addition to billions more to compensate the business for the money Kroger committed to pay and the decline in shareholder value.
Kroger alleged that Albertsons had consistently broken their agreement and meddled in the merger process, calling their charges unfounded.
According to the statement, this is an obvious attempt to shift blame after Kroger notified Albertsons in writing of their repeated violations of the contract and to demand payment of the merger break fee, to which they are not legally entitled. Kroger is eager to address these unfounded allegations in court. The facts will make it quite evident that we went above and above to enforce the merger agreement during the whole regulatory procedure.
U.S. Senator Ron Wyden and Attorney General Ellen Rosenblum were among the Oregon leaders who applauded the merger’s defeat on Tuesday.
According to Wyden, this is fantastic news for Oregon grocery buyers who would have had to pay more at Kroger and Albertsons if this poorly thought out amalgamation had been successful. In addition to driving up grocery prices for consumers already walking a tightrope, this monster deal would have made it even more difficult for Oregonians to locate pharmacies and for employees at both supermarket chains to demand better working conditions and more equitable pay. For these reasons, I’m glad the court has put it on hold.
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