Kroger Countersuit Blames Albertsons for Merger’s Failure

Aftershocks from the failed Kroger–Albertsons merger continue to ripple through the legal system. Albertsons had halted the proposed $24.6 billion merger in December 2024, a move that was promptly followed by Albertsons’ suing Kroger in the Delaware Court of Chancery, claiming Kroger had failed to exercise “best efforts” and to take “any and all actions” to secure regulatory approval of the merger.

Now Kroger has countersued, saying Albertsons is not entitled to the $600 million termination fee that had been part of the merger agreement. The suit also accused the retailer of “engaging in a secret and misguided campaign, together with C&S Wholesale Grocers, the divestiture buyer, to purse its own regulatory strategy, which ultimately undermined Kroger’s efforts,” according to a Kroger company statement.

The merger had originally been announced in October 2022. Facing regulatory challenges, Kroger and Albertsons identified the nearly 600 stores they planned to sell to C&S Wholesale Grocers in July 2024.

Albertsons is standing its ground. In a statement, a spokesperson said Kroger’s “weak claims are a deliberate tactic to distract from its own ongoing executive leadership issues; blatant and recurring failures to carry out its contractual obligations under the merger agreement; and avoid paying the damages it owes to Albertsons.

“As highlighted by multiple judges in the decisions blocking the merger, Kroger – under the leadership of former CEO Rodney McMullen – acted in its own financial self-interest, proposing insufficient divestiture packages that repeatedly ignored regulators’ concerns, mismanaging the process of identifying a divestiture buyer, and failing to cooperate with Albertsons,” the spokesperson added. “We look forward to presenting our case in court.”

Kroger Alleges Misconduct by Albertsons Execs

Kroger’s countersuit, not surprisingly, claims Albertsons was responsible for scuttling the deal. The suit alleges that this misconduct came to light in the middle of the antitrust trials that the planned merger had spawned, under government cross-examination of Susan Morris, Albertsons’ recently promoted CEO designate.

Kroger alleges that Albertsons executives, including Morris, were secretly working with C&S to supplant and undermine Kroger’s regulatory strategy, with misconduct including “secret communications with C&S’s CEO and others, utilizing personal emails and cell phones to advance Albertsons’ strategy,” according to the Kroger statement. Kroger claims this strategy resulted in C&S criticizing the divestiture package, causing regulators to believe C&S was an inadequate divestiture buyer.

Kroger also claims that Albertsons was developing its own “Plan B” alternative if the merger failed, “manufacturing a paper trail over many months including unfounded allegations by Albertsons that are directly contrary to the under-oath testimony that their executives gave during the antitrust trials.” The company added that Albertsons filed its 140-page complaint against Kroger within “hours” of the court decisions blocking the merger.