Kroger spent more than $1B on failed Albertsons merger
It has come to light that Kroger spent more than $1 billion throughout its ill-fated journey toward merging with Albertsons. In its annual report regulatory filing with the U.S. Securities and Exchange Commission on April 1, Kroger reported that it spent $684 million in 2024 on “merger related costs,” which included “third-party professional fees (outside experts, such as lawyers) and credit facility fees (borrowing costs).”
The failed merger, which was originally announced in October 2022, cost Kroger $316 million in 2023 and $44 million in 2022, according to a Cincinnati Enquirer report.
In late March, meanwhile, Kroger filed a legal response to Albertsons’ earlier lawsuit against it, which claimed that Kroger failed to exercise “best efforts” and to take “any and all actions” to obtain regulatory approval of the companies’ proposed merger deal. Kroger is now claiming that while it was working to seek regulatory approval and close the merger, Albertsons was engaging in a secret campaign alongside C&S Wholesale Grocers to pursue its own regulatory strategy, which ultimately undermined Kroger's efforts.
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Kroger says that 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 other damages it is seeking. The alleged misconduct included incoming Albertsons CEO Susan Morris’ “secret communications with C&S's CEO and others, utilizing personal emails and cell phones to advance Albertsons's strategy.”
Albertsons contends that it was steadfastly committed to completing the merger, stating that “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.”
Earlier in March, C&S Wholesale Grocers filed its own claim that Kroger should pay a $125 million termination fee. C&S had a major stake in the deal, planning to pick up nearly 600 Kroger and Albertsons stores, distribution centers and other assets as part of a divestiture plan.
Per a Wall Street Journal report, C&S argued that Kroger needs to meet the terms of an agreement. "Kroger failed to identify any reason for its refusal to pay the termination fee it owed C&S — because there is none," C&S asserted in a legal filing.
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Cincinnati-based Kroger serves more than 11 million customers daily through a digital shopping experience and retail food stores under a variety of banner names.
As of Nov. 30, 2024, Albertsons operated 2,273 retail food and drug stores with 1,732 pharmacies, 405 associated fuel centers, 22 dedicated distribution centers and 19 manufacturing facilities. The Boise, Idaho-based company operates stores across 34 states and the District of Columbia under more than 20 well-known banners.
This story originally appeared on sister publication Progressive Grocer.
