Kroger files legal response, brings counterclaims against Albertsons
Kroger announced on Tuesday that it has filed its answer and counterclaims to the complaint brought by Albertsons in the Delaware Court of Chancery, in connection with the previous merger agreement between the two companies, which was terminated in December 2024.
Kroger said, "As detailed in the court filing, while Kroger was working diligently to seek regulatory approval and close the merger, Albertsons was engaging in a secret and misguided campaign, together with C&S Wholesale Grocers, the divestiture buyer, to pursue its own regulatory strategy, which ultimately undermined Kroger's efforts. Albertsons's misconduct shockingly came to light in the middle of the antitrust trials under government cross examination of Susan Morris, Albertsons's recently promoted CEO designate. As a result of its misconduct, Albertsons is not entitled to the $600 million termination fee under the terms of the parties' merger agreement, nor is Albertsons entitled to the other damages it seeks."
Kroger said it continues to capitalize on its business model, generating differentiated value for all stakeholders. "This includes significant investments that are delivering lower prices and increasing wages, while further improving the experience for an expanding customer base. The company recently reported quarterly results ahead of expectations and positive momentum in 2025, as it drives sustainable future growth and compelling total shareholder returns", the retailer said.
[Related: C&S Wholesale Grocers sues Kroger over failed Albertsons merger deal]
Kroger also provided a counterclaims background, stating, "While Kroger was working diligently to seek regulatory approval and close the merger in accordance with the merger agreement, Albertsons executives (including Ms. Morris) were secretly working with C&S to supplant and undermine Kroger's regulatory strategy. The misconduct included Ms. Morris's secret communications with C&S's CEO and others, utilizing personal emails and cell phones to advance Albertsons's strategy. This strategy resulted in C&S criticizing the divestiture package that C&S had voluntarily agreed to, which in turn caused regulators to believe that C&S was an inadequate divestiture buyer. The Washington court cited these very communications when it ultimately blocked the merger."
"The counterclaims also describe Albertsons's development of a 'Plan B' to sue Kroger in the event the merger failed to close, by manufacturing a paper-trail over many months including unfounded allegations by Albertsons that are directly contrary to the under-oath testimony that their executives gave during the antitrust trials," the company said.
[Related: Albertsons terminates merger with Kroger after U.S. district court blocks acquisition]
"Kroger was prepared, in the event of adverse court decisions, to pursue all remaining options to close the merger. But, within hours of the court decisions blocking the merger, Albertsons terminated the merger agreement and filed a 140-page complaint against Kroger. These actions ensured that the merger would never close, and further demonstrated that Albertsons had long before shifted its focus towards the litigation that is now pending between the parties, abandoning its contractual obligation to use best efforts to close the transaction," Kroger said.
"Through its counterclaims, Kroger is affirmatively seeking damages from Albertsons as a result of its willful misconduct and material breaches of the merger agreement. Kroger will seek to recover the investment it made to obtain regulatory approval for the merger while Albertsons was surreptitiously working to undermine it," the retailer said.
An Albertsons spokesperson provided DSN with the following statement: “Kroger’s weak claims are a deliberate tactic to distract from its own ongoing executive leadership issues; blatant and recurring failures to carry out its contractual obligations under the Merger Agreement; and avoid paying the damages it owes to Albertsons. Albertsons was steadfastly committed to the success of the combination from the outset. By contrast, Kroger did not hold up its end of the bargain, despite its duty under the Merger Agreement to take “any and all actions” to address regulatory concerns. As highlighted by multiple judges in the decisions blocking the merger, Kroger—under the leadership of former CEO Rodney McMullen—acted in its own financial self-interest, proposing insufficient divestiture packages that repeatedly ignored regulators’ concerns, mismanaging the process of identifying a divestiture buyer, and failing to cooperate with Albertsons. Kroger’s self-interested conduct doomed the merger, and we are now focused on returning value to Albertsons’ shareholders to compensate for those losses. We look forward to presenting our case in court.”
[Related: Kroger files lawsuit against FTC]