The Zhitong Finance app notes that, nearly two years after the largest supermarket merger in U.S. history fell through, Albertsons (ACI.US) and Kroger (KR.US) are set to bring this legal dispute to court. The outcome of this case could impact any large transaction facing antitrust review by regulatory authorities.
The former CEOs of both companies are listed to testify in the two-week trial beginning Monday in the Delaware Court of Chancery. The dispute centers on the $246
Was Kroger at fault for the failed $24.6 billion transaction? In December 2024, the U.S. Federal Trade Commission (FTC) stated that the merger of 4,000
Multiple stores would give both parties excessive market power, leading the federal court to block the transaction.
Ahold Delhaize claims that Kroger is unwilling to sell stores and assets on a scale sufficient to obtain regulatory approval, instead focusing on achieving internal profit targets. Kroger, however, argues that it has made every effort, spending over $
$1 billion, but the merger would not have been approved under then-FTC Chair Lina Khan.
Mont Mann, a partner at Armstrong Teasdale LLP, said a key focus of the trial will be “the statements made by Kroger executives in emails and other internal communications regarding what they knew, what they were advised, and why they made these decisions, as this will fully inform the judge whether this was a failed strategy or a knowing and intentional breach.” Mann is not involved in this case.
$9.3 billion in compensation
Both parties will present their arguments to Equity Court Judge Lori Will, who will determine whether Kroger knowingly violated the merger agreement. Albertsons is seeking over $9.3 billion from Kroger, including $6
A termination fee of hundreds of millions of dollars plus interest and expenses, and over $8 billion—Abercrombie claims this represents the premium loss shareholders could have realized from the transaction, along with related tax liabilities on the gains.
Albertsons' largest shareholder is the private equity firm Cerberus Capital.
Management is expected to begin by questioning the company’s former CEO, Vivek Sankaran, who led the company during the antitrust dispute. External counsel Ted Hase, who provided antitrust advice to Albertsons on the merger, and Tom Moriarty, General Counsel and head of M&A, will also testify on behalf of the company.
Other key witnesses to be summoned earlier this week include Rodney McMullen, former CEO of Kroger, who stepped down in March 2025 following a board investigation into his personal conduct.
Monthly resignation—and Michael Bernstein, a lawyer at Arnold & Porter who provided antitrust consulting to Kroger.
In 2022, the largest U.S. supermarket chain Kroger and the second-largest Albertsons
The merger was announced last year, with the aim of better competing against rivals such as Amazon and Walmart. Discount supermarkets like Aldi, known for their streamlined business models, have gained widespread popularity, while dollar stores and pharmacies have expanded their food offerings to attract more customers. Meanwhile, demand for grocery items has remained steady, as households prioritize essential goods when cutting costs.
Spin-off plan
To secure regulatory approval for the proposed merger, Kroger and Albertsons agreed to sell hundreds of stores to C&S Wholesale Grocers. However, a federal judge sided with
After the FTC determined that the divestiture plan was insufficient, the transaction was halted. Albertsons subsequently terminated the deal and sued Kroger.
To recover damages, Albertsons must prove that Kroger breached the merger agreement by failing to take necessary steps to obtain regulatory approval, and that Kroger knew it was in breach.
During the trial, Albertsons will seek to prove that Kroger disregarded the advice of its own antitrust lawyers and regulators, persisting with a “failed low-price strategy”—choosing to preserve its more valuable stores to meet return targets rather than taking the necessary steps to obtain antitrust approval, even when doing so conflicted with its financial interests. It will also seek to demonstrate that Kroger’s alleged breaches reduced the likelihood of the transaction’s completion.
Kroger will seek to demonstrate that it relied on antitrust legal advice when formulating its divestiture plan and had no motive to cause the transaction to fail.
Termination fee
Bloomberg Industry Research's litigation analyst predicts that Kroger will not be held liable for damages, as the judge is unlikely to find that the supermarket chain knowingly violated the merger agreement. However, the firm states that Kroger has a 70%
The probability requires paying a $600 million termination fee for "non-intentional default."
Kroger stated that it should not pay a termination fee, arguing that Albertsons violated the merger agreement by undermining its efforts with regulators through secret communications with C&S.
Barry Nigrin, Global Co-Chair of Antitrust at Freshfields, said the judge’s ruling in the Albertsons-Kroger case could impact future transactions. Nigrin noted that companies may reconsider how they draft merger agreements, depending on how the court interprets the concept of “commercially reasonable efforts”—particularly for deals requiring asset divestitures across multiple jurisdictions.
Kroger argued that it complied with the merger agreement through "reasonable" efforts, while Albertsons stated that Kroger should have done more than "reasonable."
The last public showdown triggered by a failed transaction due to antitrust concerns occurred more than six years ago—Cigna’s $48 billion attempt to acquire Anthem.
The billion-dollar merger deal fell through. In this case, Chancellor Travis Laster of the Delaware Court of Chancery found that Signa had breached the merger agreement, but denied a multi-billion-dollar damages award because the transaction was likely to have been blocked on antitrust grounds anyway.
The same logic applies to Kroger’s defense. Kroger’s lawyers argued that the FTC
Focusing solely on grocery-only retailers results in a narrower view of the competitive landscape than Kroger and Albertsons. This would have required Kroger to sell far more than the 650-store cap in the merger agreement.
Since the transaction was canceled, Kroger and Albertsons have both appointed new CEOs. Both companies have stated their intention to increase investments to help lower product prices, while acknowledging that food inflation may rise later this year. Kroger is also committed to improving in-store services, expanding e-commerce, and accelerating the opening of new stores, while Albertsons has initiated a comprehensive business review.