Albertsons cancels merger and sues Kroger

new York
CNN
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Grocery chain Albertsons has called off its $25 billion merger with Kroger, ending the largest planned merger in U.S. supermarket history.

“We have made the difficult decision to terminate the merger agreement,” Albertsons CEO Vivek Sankaran said in a statement Wednesday.

The merger, announced in 2022, aimed to unite the country’s fifth and tenth largest retailers. The companies include dozens of grocery chains, including Safeway, Vons, Harris Teeter and Fred Meyer.

Albertsons also sued Kroger for breach of contract, claiming that Kroger caused the merger to be blocked. Albertsons said Kroger failed to “exercise every effort” and take “all measures” to obtain regulatory approval of the merger.

Kroger did not immediately comment on ending the deal or the lawsuit.

The collapse came a day after federal judge Adrienne Nelson in Oregon halted the deal, saying it would hurt competition.

Supermarkets have been losing ground to competitors in recent decades, and Kroger and Albertsons wanted to merge to better combat Walmart and Amazon. Kroger and Albertsons also employ mostly union workers and said they wanted to merge to be more competitive against non-union giants.

However, in her ruling, Nelson said supermarkets “are different from other grocery retailers” and are not direct competitors to Walmart, Amazon and other companies that sell a broader range of goods. The merger would eliminate direct competition between Albertsons and Kroger and potentially increase prices for consumers, she said in the ruling.

And the deal faced stiff opposition from a coalition of labor unions, small grocery stores and political leaders from both parties wary of corporate consolidation. The Federal Trade Commission sued to block the merger, and the deal’s collapse is a victory for outgoing FTC Chair Lina Khan. Khan is skeptical of large mergers and acquisitions, arguing that they often harm consumers.

Although Kroger and Albertsons said their combined size would allow them to lower prices for consumers, opponents argued that the merger would lead to higher prices.

Investors seemed to expect the deal to fall apart: Shares of Kroger and Albertsons rose on Wednesday. Albertsons helped boost its stock price by announcing Wednesday it would buy back up to $2 billion in stock.

Albertsons also said it will continue to invest in improving its stores, technology and employees.

Analysts say Kroger is in a stronger position than Albertsons because of its size. Kroger is the largest grocery chain in America.

Kroger CEO Rodney McMullen said last week that the company was well positioned to grow even if the deal ended.

“We have always been careful not to have to do mergers to make our business successful,” he said. “If it doesn’t work, we move on.”

This story has been updated with additional reporting and context.