Written by AP Business Writer DEE-ANN DURBIN
Albertsons is suing Kroger and abandoning its plan to merge, claiming the grocery chain failed to obtain regulatory approval for the $24.6 billion deal.
The action was taken the day after two judges in different legal cases blocked the merger. Following a three-week hearing in Portland, Oregon, U.S. District Court Judge Adrienne Nelson imposed a preliminary injunction on Tuesday, preventing the merger. Judge Marshall Ferguson of Seattle, who determined that the combination would reduce competition in the state and violate consumer protection rules, issued a permanent injunction prohibiting it in Washington an hour later.
In 2022, Kroger and Albertsons planned the biggest grocery chain merger in American history. The businesses said that a combination would enable them to more effectively compete with major retailers such as Amazon, Costco, and Walmart.
Under the terms of the merger agreement, the 22-state rivals Kroger and Albertsons agreed to sell 579 shops to C&S Wholesale Grocers, a supplier to independent supermarkets located in New Hampshire that also owns the Grand Union and Piggly Wiggly store brands.
However, earlier this year, the Federal Trade Commission filed a lawsuit to stop the merger, claiming that by removing competition, it will increase prices and reduce worker salaries. Additionally, it said that C&S was unprepared to take on so many locations and that the divestiture strategy was insufficient.
Albertsons stated on Wednesday that Kroger had not done everything possible to obtain regulatory clearance of the merger deal that the firms had agreed to.
According to Albertsons, Kroger rejected stronger divestment buyers, disregarded regulators’ advice, and refused to sell the assets required for antitrust approval.
Kroger knowingly violated the Merger Agreement in a number of significant ways, such as by consistently refusing to sell off assets required for antitrust approval, disregarding regulators’ advice, turning down more powerful divestment buyers, and not collaborating with Albertsons.
In a statement, Albertsons’ general counsel Tom Moriarty claimed that Kroger’s self-serving actions, which were performed at the expense of Albertsons and the agreed-upon deal, had hurt the company’s colleagues, shareholders, and customers.
In the clearest possible terms, Kroger stated that it disagrees with Albertsons. Early on Wednesday, it declared that Albertsons was accountable for numerous deliberate material violations and meddling during the merger procedure.
At the opening bell, Kroger’s stock increased little, while Albertsons’ shares increased more than 2%.
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