Jewel-Osco owner Albertsons is giving up on its merger with Mariano’s parent Kroger and it is suing the grocery chain, saying it didn’t do enough to secure regulatory approval for the $24.6 billion agreement.
The move came the day after two judges halted the merger in separate court cases. U.S. District Court Judge Adrienne Nelson issued a preliminary injunction blocking the merger Tuesday after holding a three-week hearing in Portland, Oregon. An hour later, Judge Marshall Ferguson in Seattle issued a permanent injunction barring the merger in Washington after concluding it would lessen competition in the state and violate consumer-protection laws.
Kroger and Albertsons proposed in 2022 what would be the largest grocery store merger in U.S. history. The companies said a merger would help them better compete with big retailers like Walmart, Costco and Amazon.
Kroger operates in 35 states and the District of Columbia. In Illinois, the company owns close to 50 Mariano’s supermarkets and some Food 4 Less stores. Elsewhere, the company’s banners include Harris Teeter, Ralphs and Smith’s. Albertsons is the owner of around 180 Jewel-Osco stores in Illinois. The company has grocery stores in more than 30 other states, including Safeway and Shaw’s. Together the companies employ about 700,000 people.
Under the merger agreement, Kroger and Albertsons agreed to sell 579 stores in places where their locations overlap to C&S Wholesale Grocers, a New Hampshire-based supplier to independent supermarkets that also owns the Grand Union and Piggly Wiggly store brands. In Illinois, where the companies have significant overlap, they agreed to sell off 35 supermarkets, including most Mariano’s stores and the Mariano’s brand name.
But the Federal Trade Commission sued to block the merger earlier this year, saying it would raise prices and lower workers’ wages by eliminating competition. It also said the divestiture plan was inadequate and that C&S was ill-equipped to take on so many stores.
The move drew praise from those who had opposed the deal, including Illinois Attorney General Kwame Raoul.
“Today’s ruling is a victory for consumers in Illinois and across the country,” Raoul said in a statement Tuesday. “Reduced competition would lead to higher grocery prices for families at a time when too many can least afford it.”
On Wednesday, Albertsons said that Kroger failed to exercise “best efforts” and to take “any and all actions” to secure regulatory approval of the companies’ agreed merger transaction.
Albertsons said Kroger refused to divest the assets necessary for antitrust approval, ignored regulators’ feedback and rejected stronger investment buyers.
“Kroger’s self-serving conduct, taken at the expense of Albertsons and the agreed transaction, has harmed Albertsons’ shareholders, associates and consumers,” said Tom Moriarty, Albertsons’ general counsel, in a statement.
Kroger said that it disagrees with Albertsons “in the strongest possible terms.” It said Wednesday that Albertsons was responsible for “repeated intentional material breaches and interference throughout the merger process.”
