Albertsons is giving up on its merger with Kroger a day after it was rejected in two courts and it is suing the grocery chain, saying it didn't do enough to secure regulatory approval for the $24.6 billion agreement. US District Court Judge Adrienne Nelson issued a preliminary injunction blocking the merger Tuesday after holding a three-week hearing in Portland, Oregon. Then Judge Marshall Ferguson in Seattle issued a permanent injunction barring the merger in Washington after concluding it would lessen competition in the state and violate Washington's consumer-protection laws, reports the AP.
On Wednesday Albertsons said that Kroger failed to exercise "best efforts" and to take "any and all actions" to secure regulatory approval of the companies' agreed merger. Albertsons said in a statement cited by Bloomberg that its breach-of-contract claims seek "billions of dollars in damages from Kroger to make Albertsons and its shareholders whole." Along with a $600 million termination fee, Albertsons wants compensation for the "multiple years and hundreds of millions of dollars it devoted to obtaining approval for the merger."
"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," Tom Moriarty, general counsel for Albertsons, tells the Wall Street Journal. Shares of Albertsons rose more than 2% before the market open, while Kroger's stock declined slightly. (More Kroger stories.)
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