Albertsons Terminates Kroger Merger, Sues for at Least $6 Billion Including $600 Million Break Fee

Albertsons has walked away from its proposed merger with Kroger and filed suit against its former partner seeking at least $6 billion in damages, a figure that includes a $600 million termination fee the two grocers had agreed upon if the deal collapsed. The move came one day after separate federal and state judges blocked the acquisition, according to Grocery Dive and the Wikipedia summary of the deal's history.

What Happened

On December 10, 2024, U.S. District Judge Adrienne Nelson issued a preliminary injunction halting Kroger's roughly $24.6 billion bid for Albertsons, and King County Superior Court Judge Marshall Ferguson separately ruled to block the deal in Washington state, according to Wikipedia's account of the case. The following day, Albertsons announced it was terminating the merger agreement and simultaneously suing Kroger for breach of contract, Grocery Dive reported.

Both companies, per Wikipedia, accused each other of not doing enough to address regulators' concerns during the review process.

The Damages Claim

Albertsons' breach-of-contract suit seeks at least $6 billion in damages, a figure that includes the $600 million termination fee Kroger had agreed to pay if the merger did not close, according to Wikipedia's summary of the litigation. Grocery Dive reported that Albertsons says it is entitled to that fee and much more.

In its announcement, Albertsons framed the bulk of its claim around lost shareholder value. "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," the company said, as quoted by Grocery Dive. Albertsons added that it is also seeking to recover "for the time, energy and resources it invested in good faith to try to make the merger a success."

Albertsons' Allegations

Albertsons general counsel and chief policy officer Tom Moriarty said Kroger failed to live up to its contractual obligations. "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," Moriarty said in a statement reported by Grocery Dive.

The remedy package at the center of the regulatory fight involved divesting 579 grocery stores across 18 states and Washington, D.C., to C&S Wholesale Grocers, according to Wikipedia. Grocery Dive reported that Albertsons claims Kroger did not offer an adequate divestiture package, "repeatedly ignored regulators' concerns" and failed to cooperate with Albertsons, which Albertsons says led to the two courts halting the deal.

Kroger's Response

Kroger rejected the allegations outright. In a statement reported by Grocery Dive, Kroger called Albertsons' claims "baseless and without merit" and said its former merger partner had violated the companies' agreement on multiple occasions since the deal was announced in 2022. Kroger also said it does not believe Albertsons is entitled to the termination fee at all.

"We went to extraordinary lengths to uphold the merger agreement throughout the entirety of the regulatory process and the facts will make that abundantly clear," Kroger said, according to Grocery Dive.

Albertsons' Stated Rationale

In court filings cited by Grocery Dive, lawyers for Albertsons argued the grocer faces an uncertain competitive future without the merger, saying it may struggle to compete with Walmart, Amazon and Costco and could eventually need to close stores or seek other merger partners. Albertsons also said terminating the deal frees it from contractual constraints, allowing it to pursue "other strategic opportunities," the company said in its announcement.

Speaking to Grocery Dive before the lawsuit was announced, R5 Capital CEO Scott Mushkin offered an outside analyst's read on Kroger's position without the deal: "It's hard not to think that they're strategically worse off over the next … five years than they would have been had they merged." That assessment is one analyst's forward-looking view, not a confirmed outcome.

A Separate Cost Dispute With State Regulators

Apart from Albertsons' suit, state attorneys general have pursued their own claim for litigation costs tied to the blocked merger. According to the Arizona Capitol Times, attorneys pursuing legal fees on behalf of eight states and the District of Columbia estimated they spent about 15,000 hours involving 45 attorneys, 16 paralegals and other support staff, and are requesting $774 an hour for the attorneys' time, arguing that rate is reasonable. The case, separate from the FTC's involvement, required the states to manage a shared database of more than 19 million documents, the outlet reported.

Those attorneys cited a Kroger filing with the Securities and Exchange Commission stating the company spent more than $1 billion over three years on the unsuccessful merger, and argued in court papers that "defendants were willing to spend $1.5 billion to see the merger through," according to the Arizona Capitol Times.

Bottom Line

Albertsons has terminated its merger agreement with Kroger and is now seeking at least $6 billion in damages — a figure that, per Wikipedia's summary of the litigation, includes the $600 million termination fee the companies had negotiated — after federal and state judges separately blocked the deal in December 2024. Kroger disputes the claims entirely and says Albertsons breached the agreement first, according to Grocery Dive. A parallel dispute over state regulators' litigation costs, in which attorneys for eight states and the District of Columbia have asked for $774 an hour covering roughly 15,000 hours of work, per the Arizona Capitol Times, adds another layer of financial fallout from the failed transaction. How a court resolves the competing breach-of-contract claims is unresolved on the record reported so far.