Albertsons called off its $24.6 billion merger with Kroger on Wednesday, a day after a judge’s ruling. temporarily blocked It sued its union and sued a competing grocery chain for breach of contract.
“In light of recent federal and state court decisions blocking our proposed merger with Kroger, we have made the difficult decision to terminate our merger agreement,” Albertsons CEO Vivek Sankaran said in a statement. said. “We are deeply disappointed in the court’s decision.”
Kroger, based in Cincinnati, Ohio, operates 2,750 stores in 35 states and the District of Columbia, including the Harris Teeter, Mariano’s, Ralph’s and Smith’s chains. Based in Boise, Idaho, Albertsons operates approximately 2,300 stores in 34 states, including brands such as Jewel-Osco, Safeway and Shaw’s. Together, the companies employ approximately 700,000 people.
In a separate statement released Wednesday, Albertsons said it would sue Kroger for willful breach of contract and breach of the Covenant of Honesty and Fair Dealing.
Albertsons’ decision to cancel the merger ends a two-year effort to create the largest grocery store merger in U.S. history, but the two companies would face competition from major retailers such as Walmart, Costco and Amazon. He claims to be able to increase his powers.
But on Tuesday, an Oregon court ruled that the proposed union would stifle competition in the grocery industry, and the Federal Trade Commission, which had argued that the deal violated antitrust laws. handed down a favorable judgment.
“The Kroger-Albertsons deal always faced an uphill battle to gain approval,” GlobalData managing director Neil Saunders said in the report. “Of all the cases the FTC has litigated over the past few years, this one was the most sensitive, involving two giant companies that supply essential goods.”
Albertsons claims breach of contract
Albertsons said Kroger had “taken ‘best efforts’ and ‘all steps required of Kroger under the terms of the parties’ merger agreement to secure regulatory approval of the merger transaction agreed to by both companies.’ “I did not take any measures.” According to the statement.
Albertsons said in a statement that Kroger “repeatedly refused to make asset sales required for antitrust approval, ignored regulatory feedback, rejected stronger divestiture buyers, and failed to cooperate with Albertsons.” The company claimed that the merger agreement had been violated.
Kroger said in an email to CBS News that Albertsons’ claims are “baseless and baseless.”
A spokesperson told CBS News: “Kroger refutes these allegations in the strongest possible terms, especially given Albertsons’ repeated and significant intentional violations and interference throughout the merger process.” said.
The companies could appeal the ruling or proceed with an internal FTC hearing. Albertsons’ decision to instead withdraw from the contract surprised some industry experts.
“I’m professionally and commercially shocked that they would take such a scorched-earth approach,” said Bart Flickinger, a longtime analyst and owner of retail consulting firm Strategic Resources Group. “I am receiving this,” he said. “Logically, Albertsons would have let the decision sink in for a day and then met afterwards to see what could be done. But the lawsuit appears to have made that moot.”
Kroger, based in Cincinnati, Ohio, operates 2,750 stores in 35 states and the District of Columbia, including brands such as Ralphs, Smiths and Harris Teeter. Boise, Idaho-based Albertsons operates approximately 2,300 stores in 34 states, including brands such as Safeway, Jewel-Osco and Shaw’s. Together, the companies employ approximately 700,000 people.
Under the merger agreement, Kroger and Albertsons, which compete in 22 states, will supply 579 stores in areas with overlapping locations to the New Hampshire-based independent supermarket, which also owns Grand Union and Piggly Wiggly. The company had agreed to sell the company to C&S Wholesale Grocers. Store brand.
But the FTC filed a lawsuit earlier this year seeking to block the merger, saying it would increase prices and lower worker wages by eliminating competition. He also said the sale plan was inadequate and that C&S was not prepared to take over so many stores.
contributed to this report.
