One day after a federal judge blocked the biggest acquisition in Kroger’s history, the Albertsons grocery chain is suing Kroger for “billions of dollars” in damages.
Albertsons press release claims Kroger caused the merger to fail by ignoring regulators’ feedback, rejecting stronger divestiture buyers and failing to cooperate with Albertsons in pursuing the deal. It’s seeking not only a $600 million termination fee that’s required by the deal, but reimbursement of the roughly $400 million Albertsons spent while pursuing the merger and lost shareholder value caused by the deal's failure.
“Rather than fulfill its contractual obligations to ensure that the merger succeeded, Kroger acted in its own financial self-interest, repeatedly providing insufficient divestiture proposals that ignored regulators’ concerns,” Albertsons General Counsel Tom Moriarty said in a press release. “We are disappointed that the opportunity to realize the significant benefits of the merger has been lost on account of Kroger’s willfully deficient approach to securing regulatory clearance.”
Kroger called the allegations "baseless and without merit" in a statement:
"Kroger refutes these allegations in the strongest possible terms, especially in light of Albertsons’ repeated intentional material breaches and interference throughout the merger process. This is clearly an attempt to deflect responsibility following Kroger’s written notification of Albertsons’ multiple breaches of the agreement, and to seek payment of the merger’s break fee, to which they are not entitled."
Albertsons’ lawsuit could significantly increase Kroger's merger expenses, which stood at $658 million at the end of its fiscal second quarter on Aug. 17. Albertsons spent $397 million through two quarters of this year. Figures for the third quarter have not yet been filed with the U.S. Securities and Exchange Commission.
