Albertsons sues Kroger after judge rules against grocery merger

Albertsons on Wednesday formally terminated its proposed $25 billion merger with Kroger and filed a lawsuit against its supermarket competitor, saying Kroger violated its contract and didnâ€t follow through on commitments to help get the deal approved.

It comes a day after a judge blocked the planned tie-up.

In a news release, Albertsons said Kroger broke its merger agreement “by repeatedly refusing to divest assets necessary for antitrust approval, ignoring regulators†feedback, rejecting stronger divestiture buyers and failing to cooperate with Albertsons.�

“Krogerâ€s self-serving conduct, taken at the expense of Albertsons and the agreed transaction, has harmed Albertsons†shareholders, associates and consumers,â€� Albertsons†General Counsel and Chief Policy Officer Tom Moriarty said in a statement. “We are disappointed that the opportunity to realize the significant benefits of the merger has been lost on account of Krogerâ€s willfully deficient approach to securing regulatory clearance.â€�

In a statement, Kroger called the allegations in the lawsuit “baseless and without merit.�

“This is clearly an attempt to deflect responsibility following Krogerâ€s written notification of Albertsons†multiple breaches of the agreement, and to seek payment of the mergerâ€s break fee, to which they are not entitled,â€� the companyâ€s statement said.

About two years ago, Kroger announced plans to buy Albertsons and combine forces to fend off Walmart, Amazon and Costco. The deal would have put nearly 40 supermarket chains, including Krogerâ€s Fred Meyer and Albertsons†Safeway under a single company.

The lawsuit Wednesday amounts to something of a corporate divorce battle.

The companies are at odds about who should pay for the legal fees associated with the merger and who, if anyone, is responsible for paying a breakup fee.

Albertsons said in its news release that it is owed both a $600 million termination fee and “relief reflecting the multiple years and hundreds of millions of dollars it devoted to obtaining approval for the merger, along with the extended period of unnecessary limbo Albertsons endured as a result of Krogerâ€s actions.â€�

Kroger, on the other hand, pushed back against payments to Albertsons in its statement and said it “looks forward to responding to these baseless claims in court.�

Shares of Albertsons and Kroger were up about 0.5% and 1%, respectively, in early trading Wednesday.