Kroger Initiates Countersuit Against Albertsons for Failed Merger Deal

After a failed merger of Kroger and Albertsons, the two grocers have been exchanging lawsuits. The latest comes from Kroger, which accuses Albertsons of quietly sabotaging the regulatory clearance that was needed for the merger.

The Kroger-Albertsons merger was blocked by a federal judge in December 2024. Government regulators feared that letting the two grocers combine would negatively affect consumers by eliminating fair competition.

Part of the deal Kroger made included a $600 million termination fee payable to Albertsons should the merger fail. Yet, Kroger refused to pay the money, prompting a lawsuit from Albertsons in December. Asking for “billions of dollars in damages,” Albertsons claimed Kroger breached the merger contract by ignoring regulators’ requests and not providing a suitable divestiture package.

This week, Kroger fired back with a counterclaim. The grocery chain claims that Albertsons and C&S Wholesale Grocers worked through “personal emails and cell phones” in an effort to weaken Kroger’s position in the eyes of regulators.

“Albertsons was engaging in a secret and misguided campaign, together with C&S Wholesale Grocers, the divestiture buyer, to pursue its own regulatory strategy, which ultimately undermined Kroger’s efforts,” Kroger wrote in a statement.

As a result, Kroger believes it should not be obligated to pay the termination fee. According to the grocer, Albertsons is not entitled to any damages, either.

Kroger Lawsuit Details

According to Kroger’s claim, C&S told government regulators that it would not be able to compete effectively unless Kroger added more stores and assets to the deal. Reportedly, an Albertsons executive believed Kroger would have offered the additional assets after C&S’s testimony. However, Kroger did not, and regulators decided instead that C&S was an inadequate divestiture buyer, which led to the decision to ultimately block the Kroger-Albertsons merger.

Kroger alleges that Albertsons had a “plan B” should the first strategy not work out. Albertsons’ purported second tactic involved “manufacturing a paper-trail” with the goal of suing Kroger if the merger failed.

Kroger claims it wanted to explore other options to keep the merger deal alive even after the court’s December decision. However, Albertsons canceled the proposed agreement and almost immediately filed a lawsuit asking for the termination fee.

In the most recent lawsuit, Kroger is seeking a recovery of its investment in the failed merger agreement. Albertsons says, however, that Kroger is just trying to “avoid paying the damages it owes.”