Albertsons demands billions after failed Kroger acquisition

American supermarket chains Albertsons and Kroger are abandoning their planned merger after court rulings have blocked the deal. This is not the end of the story, however, as Albertsons has sued Kroger for breach of contract.

No green light from courts

The deal, which was announced in 2022, met stiff opposition from competition regulators. Earlier this week, two judges in different states ruled that the merger would substantially reduce competition in the grocery market, especially in areas where both chains have a strong presence. Another reason to not greenlight the deal was the fear for reduced competition and rising prices for consumers. A combination of Albertsons and Kroger would have become the second-largest player in the United States grocery market, with a national market share of 11 % – only behind Walmart’s 17 %.

The collapse of the deal does not mean the end of the story: Albertsons is now demanding damages running into the billions, as well as a termination payment of 600 million dollars (570 million euros), Reuters reports. The chain accuses Kroger of not taking sufficient action to meet regulators’ requirements, a claim that Kroger firmly rejects.

However, Kroger has now said that an internal review demonstrated it is no longer in its interest to pursue the merger. Rather, the group announced a share buyback programme worth 7.5 billion dollars. This move would appear to shift the chain’s focus from expansion through acquisitions to shareholder value. On the other hand, Albertsons is also increasing its share buyback programme and emphasises its investments in new technology.