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Albertsons ACI.N on Wednesday ended its $25 billion merger bid with Kroger KR.N after courts blocked the deal and sued its rival, alleging a breach of contract that led to the failure of the agreement.
The formal termination ends two years of effort by the retail chains to merge, which regulators say would lead to higher prices for consumers. Albertsons said it was suing because Kroger failed to take “all necessary steps” to get the deal approved.
Albertsons is seeking billions of dollars in damages as well as a $600 million breakup fee. Kroger did not immediately respond to a request for comment on the lawsuit.
“Given recent decisions by federal and state courts to block our proposed merger with Kroger, we have made the difficult decision to terminate the merger agreement,” said Albertsons Chief Executive Officer Vivek Sankaran.
Two different courts blocked the deal Tuesday, siding with the Federal Trade Commission, which called for a halt to the deal and argued in a trial that the merger would eliminate competition between the retail chains. traditional grocery stores, which would lead to higher prices and reduce the flexibility of unionized workers.
The deal has become a symbol of soaring food prices. Food prices in the United States have increased 25% over the past four years, and even though inflation shows signs of slowing in 2024, grocery bills remain a source of concern for consumers .
The FTC filed the lawsuit with the attorneys general of eight states and the District of Columbia. Colorado, like Washington, filed a lawsuit of its own to block the operation.
Kroger defended the proposed consolidation by saying it would lower prices at Albertsons stores, where it said prices are 10 to 12 percent higher than its own. The combined company would fund the price cuts through the cost savings it expects from a larger operation, and a larger customer base that would generate revenue for Kroger's data consulting business.
Shares of Albertsons were up 1.5% in premarket trading Wednesday, while those of Kroger were down slightly.
