Safeway owner terminates $25 billion merger with City Market parent company, announces lawsuit against Kroger

Albertsons, Safeway’s parent company, announced it had terminated its $24.6 billion merger agreement with Kroger Wednesday morning.

The decision comes just one day after the U.S. District Court in Oregon and the King County Superior Court for the State of Washington ruled to temporarily halt the proposed merger on Dec. 10.

“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,” Albertsons CEO Vivek Sankaran said in a prepared statement. “We are deeply disappointed in the courts’ decisions.”

On the same day Albertsons announced it had broken off the merger, the company filed a lawsuit against Kroger for willful breach of contract and the company’s failure to secure regulatory approval of the merger, according to a separate company statement.

Albertsons said the recent rulings from the U.S. District Court for the District of Oregon and the King County Superior Court for the State of Washington confirm the company’s claims against Kroger, stating the regulators’ requests to block the merger could have been avoided had it not been for Kroger’s breach of conduct.

“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,” Albertsons General Counsel and Chief Policy Officer Tom Moriarty said in a statement.

Albertsons said it is seeking billions of dollars in damages from Kroger, as they claim shareholders have been subjected to a decrease in shareholder value while waiting for the merger to be approved. The merger proposal also required Kroger to pay a $600 million termination fee to Albertsons if it did not succeed.

Kroger, which operates 150 stores in Colorado, published a statement in response to Albertsons’s lawsuit late Wednesday morning, calling it “baseless and without merit.”

“Kroger refutes these allegations in the strongest possible terms, especially in light of Albertsons’ repeated intentional material breaches and interference throughout the merger process, which we will prove in court,” the statement reads. “This is clearly an attempt to deflect responsibility following Kroger’s written notification of Albertsons’ multiple breaches of the agreement, and to seek payment of the merger’s break fee, to which they are not entitled.”