Albertsons said in unsealed filing that Kroger had ‘buyer’s remorse’ after inking merger
Albertsons accused rival grocer Kroger of sabotaging their planned merger in a lawsuit unsealed Monday.
The merger between the two supermarket chains was blocked by a pair of judges last week. The next morning, Albertsons announced that it was terminating the deal and suing Kroger for billions of dollars, filing a 140-page lawsuit against its former business partner that alleges Kroger suffered a classic case of “buyer’s remorse.”
The deal, halted for antitrust concerns, would have combined the nation’s largest and second-largest traditional grocery chains into a colossus and extended a lifeline to Albertsons, for whom the breakup is particularly bittersweet.
Kroger President and CEO Rodney McMullen told investors that the company didn’t “need to do mergers” to be successful, and that it would “continue to go on” if the deal with Albertsons failed, Grocery Dive reported.
On the other hand, Albertsons CEO Vivek Sankaran testified in the case brought by the Federal Trade Commission that without the merger he “would have to consider” job cuts, closures and abandoning some markets if the supermarket chain cannot find other ways to lower costs, The Associated Press reported. Without Kroger, it may need to find another buyer within two to three years, Sankaran said, according to The Wall Street Journal.
Albertsons’ breach-of-contract claims, filed in a Delaware chancery court Dec. 11, allege Cincinnati-based Kroger “put itself first” in the face of regulatory opposition to the merger and ignored Albertsons’ suggestions for how to get the deal approved.
“The ink on the merger agreement was barely dry before Kroger began to develop buyer’s remorse,” the lawsuit said.
The lawsuit said Kroger received immediate negative feedback after the deal was announced and saw its stock price drop by more than 7% the next day.
It also accused Kroger of trying to offload its worst-performing stores while keeping the best stores for itself. As the Idaho Statesman previously reported, the companies proposed to sell 579 stores under assorted banners to pass antitrust muster.
The buyer would have been C&S Wholesale Grocers LLC, a little-known New Hampshire company that has operated primarily as a wholesaler so far. C&S operates two retail grocery chains: Piggly Wiggly in the South, Midwest and Northeast, and Grand Union in New York and Vermont. The stores included 10 Albertsons supermarkets in Idaho, six of which are in Boise, and one apiece in Meridian and Nampa.
Albertsons alleged that Kroger eliminated other qualified buyers from consideration and excluded it from negotiations.
The company said that on numerous occasions it pushed Kroger to add more stores to its proposed divestitures to appease federal regulators.
Dave Petso, of Modern Wealth Management in Boise, told the Idaho Statesman that without the merger, Albertsons may have to close underperforming stores and lay off some employees to cut costs.
“I think it’s a struggle for Albertsons,” Petso said by phone. “Do I think they’re going out of business? Not anytime soon. No. But are they a thriving, growing store? No. And this is a world where if you’re not growing, you’re shrinking.”
It could be a tough road ahead for the Boise-based chain. Albertsons, started in 1939 with founder Joe Albertson’s first store at the corner of State and 15th streets, has more than 2,200 retail food and drug stores under 24 banners in 34 states. It’s Idaho’s largest company, with $79 billion in yearly sales, 285,000 employees nationwide and more than 5,000 employees in Idaho, making it the Gem State’s fourth-largest employer.
Petso noted all the ways the company gives back to the community, by sponsoring various events or donating to certain causes.
“I love my hometown Albertsons,” he said. “… I don’t know why they weren’t allowed to merge. It is not anticompetitive at all. In my mind, there’s plenty of options left out there.”
This story was originally published December 18, 2024 at 4:00 AM.
