- Albertsons Companies Inc. is seeking billions of dollars in damages from Kroger Co. after their proposed supermarket merger collapsed, accusing its former deal partner of failing to take sufficient steps to secure regulatory approval ahead of a court trial scheduled to begin next week.
Albertsons is demanding at least $8 billion from Kroger Co. (NYSE: KR), with its total claim reaching approximately $9.3 billion when lost shareholder premiums, interest, expenses and a disputed $600 million termination fee are included, The Wall Street Journal reported.
The dispute stems from the companies’ proposed $24.6 billion combination, announced in October 2022. The transaction would have united two of the largest US supermarket operators, bringing together Kroger’s grocery banners and Albertsons’ Safeway, Vons and Jewel-Osco businesses.
The Federal Trade Commission and state authorities challenged the deal over concerns that reducing competition could lead to higher grocery prices and harm workers. Courts blocked the transaction in December 2024, ending the companies’ effort to combine.
The legal battle now centers on whether Kroger fulfilled its contractual obligations to pursue regulatory approval and whether Albertsons is entitled to additional damages. The companies’ merger dispute filings detail their opposing positions.
Albertsons Accuses Kroger of Mishandling Merger Approval
In court filings unsealed Monday, Albertsons alleged that Kroger proposed divestitures that favored retaining its most profitable stores while offering regulators weaker-performing locations to address antitrust concerns.
Albertsons argued that Kroger did not make sufficient concessions to improve the transaction’s chances of approval. The company said the merger agreement required Kroger to take extensive steps to remove regulatory obstacles, subject to a contractual limit on the number of stores it would have to divest.
The retailers had proposed transferring hundreds of stores to C&S Wholesale Grocers to address competition concerns. Regulators nevertheless challenged the arrangement, and courts ultimately blocked the acquisition.
Kroger has denied wrongdoing and disputed Albertsons’ claims. In its court filings, Kroger argued that the merger faced substantial regulatory obstacles from the outset and that its divestiture proposals were economically sound. It has also accused Albertsons of undermining the proposed transaction.
The disagreement extends to the $600 million termination fee. Albertsons maintains that Kroger owes the payment under the merger agreement, while Kroger contends that Albertsons failed to meet its own contractual obligations and therefore is not entitled to the fee.
The Federal Trade Commission’s case record outlines the regulatory challenge that led to the deal being blocked.
October Trial Could Determine Liability for Failed Grocery Deal
A bench trial in Delaware Chancery Court is scheduled to begin October 19 and is expected to last approximately two weeks. The proceedings will examine the contractual commitments made by both companies and whether either party bears responsibility for the merger’s collapse.
Albertsons is seeking damages tied to the value shareholders would have received if the transaction had closed, in addition to the disputed termination fee, interest and other costs. The court will need to assess the legal basis for those claims rather than simply the size of the proposed acquisition.
The failed transaction has already imposed substantial costs on both businesses. Each company has incurred roughly $1 billion in deal-related expenses, including legal and consulting fees, according to reporting on the dispute.
Both grocers are also dealing with pressure on their core operations as consumers remain sensitive to food prices and increasingly seek lower-cost alternatives. Kroger recently announced plans to cut 3,000 corporate jobs over three years, citing excess organizational layers and overhead.
Albertsons, meanwhile, has withdrawn its full-year financial guidance and announced a broader business review after reporting weaker second-quarter performance. The review is expected to examine its customer strategy, operations, brand portfolio and capital allocation.
The lawsuit could have significant implications for how companies allocate responsibility when a major acquisition fails to obtain regulatory approval. Its outcome will depend on the merger agreement, the parties’ conduct during the approval process and the evidence presented at trial.
For now, Albertsons’ multibillion-dollar demand remains a claim rather than an awarded judgment. Kroger continues to contest liability, leaving the Delaware court to determine whether either company breached its obligations and what damages, if any, are warranted.