Boise, Idaho — Albertsons Companies, Inc. has terminated its merger agreement with Kroger after the U.S. District Court in Oregon and the King County Superior Court for the State of Washington issued injunctions with respect to the proposed merger on Dec. 10, 2024. This termination entitles Albertsons to an immediate $600 million termination fee and removes contractual constraints on Albertsons’ ability to pursue other strategic opportunities.
“Given the recent federal and state court decisions to block our proposed merger with Kroger, we have made the difficult decision to terminate the merger agreement,” says Vivek Sankaran, CEO. “We are deeply disappointed in the courts’ decisions.”
Furthermore, a representative from Cerberus Capital Management, L.P. (CCM), the company’s largest shareholder, says: “While we are disappointed with the courts’ decisions, we remain confident in Albertsons’ strength as a standalone company, and we believe that it is significantly undervalued in its current trading range. Accordingly, Cerberus has no intention of selling any of its shares in the company. Cerberus initially invested in Albertsons in 2006, with additional investments in 2013 and 2015 to support significant and strategic value creation opportunities. As a long term investor in and partner to Albertsons across multiple investments and throughout the evolution of its competitive environment, Cerberus is proud of the company’s performance and it will continue to be a strong supporter of Albertsons, its talented leadership team and its dedicated associates.”
In addition to terminating its merger agreement, which was announced in October 2022, Albertsons Companies, Inc. has filed a lawsuit against The Kroger Co. in the Delaware Court of Chancery for breach of merger agreement. According to Albertsons, Kroger refused to offer an adequate divesture package and repeatedly ignored regulators’ concerns, causing the merger with Albertsons to be blocked. Pursuant to the Court of Chancery rules, Albertsons’ complaint against Kroger is temporarily under seal.
“A successful merger between Albertsons and Kroger would have delivered meaningful benefits for America’s consumers, Kroger’s and Albertsons’ associates, and communities across the country,” says Tom Moriarty, Albertsons’ general counsel and chief policy officer. “Rather than fulfill its contractual obligations to ensure that the merger succeeded, Kroger acted in its own financial self-interest, repeatedly providing insufficient divestiture proposals that ignored regulators’ concerns. Kroger’s self-serving conduct, taken at the expense of Albertsons and the agreed transaction, has harmed Albertsons’ shareholders, associates and consumers. We are disappointed that the opportunity to realize the significant benefits of the merger has been lost on account of Kroger’s willfully deficient approach to securing regulatory clearance.”
Moriarty continues: “We are taking this action to enforce and preserve Albertsons’ rights and to protect the interests of our shareholders, associates and consumers. We believe strongly in the merits of our case and look forward to presenting it to the court to hold Kroger responsible for the harm it has caused.”
Albertsons is seeking billions of dollars in damages from Kroger to make Albertsons and its shareholders whole. Albertsons’ shareholders have been denied the multi-billion-dollar premium that Kroger agreed to pay for Albertsons’ shares and have been subjected to a decrease in shareholder value on account of Albertsons’ inability to pursue other business opportunities as it sought approval for the transaction. Albertsons also seeks to recover for the time, energy and resources it invested in good faith to try to make the merger a success.
Albertsons Companies is a leading food and drug retailer in the United States. As of Septt. 7, 2024, the company operated 2,267 retail food and drug stores with 1,726 pharmacies, 405 associated fuel centers, 22 dedicated distribution centers and 19 manufacturing facilities. The company operates stores across 34 states and the District of Columbia under more than 20 well known banners including Albertsons, Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, Carrs, Kings Food Markets and Balducci’s Food Lovers Market.
SOURCE: Albertsons Companies, Inc.