Albertsons has begun a multibillion-dollar trial against rival US grocery chain Kroger, seeking more than $8 billion over allegations that Kroger failed to meet its obligations in their collapsed $24.6 billion merger.
The bench trial is taking place in Delaware’s Court of Chancery before Vice Chancellor Lori Will. Albertsons alleges that Kroger failed to do enough to secure regulatory approval for the proposed deal, which was blocked by federal and state courts in December 2024.
Albertsons terminated the merger shortly afterwards.
At the centre of the dispute is the extent of Kroger’s contractual obligations to overcome the antitrust concerns surrounding a combination of two of the largest grocery chains in the United States.
Albertsons claims Kroger breached its commitment to obtain regulatory approval by refusing to sell a sufficient number of stores. It argues that Kroger was required to take extensive steps to secure clearance, including potentially divesting as many as 650 stores.
The company alleges that Kroger instead sought to protect the profitability of the proposed combined business by limiting the stores included in divestiture packages presented to regulators.
Kroger denies breaching the merger agreement and maintains that it fulfilled its contractual obligations. It argues that regulatory opposition ultimately prevented the transaction from proceeding.
The proposed merger was announced in 2022 and would have combined approximately 5,000 stores. However, regulators challenged the transaction on competition grounds, arguing that combining the grocery businesses could reduce competition and lead to higher prices for consumers.
Federal and state courts blocked the transaction in December 2024, setting the stage for the current dispute between the former merger partners.
Albertsons is now seeking a substantial financial recovery from Kroger. Its claim includes up to $6.88 billion representing the premium it says shareholders would have received if the merger had been completed, a $600 million termination fee and more than $1 billion connected with tax adjustments.
Kroger disputes Albertsons’ entitlement to those payments.
The company says it spent more than $1 billion and devoted tens of thousands of hours of employee and adviser time to attempting to complete the transaction, which it argues demonstrates its commitment to securing approval.
Kroger also alleges that Albertsons undermined its negotiations with regulators, including through allegedly unauthorised communications concerning the divestment plan involving Susan Morris, who is now Albertsons’ chief executive.
Albertsons denies that Morris improperly disclosed sensitive information.
The trial is expected to examine decisions made by senior executives at both companies during their attempts to win regulatory approval.
Potential witnesses include Morris, former Kroger chief executive Rodney McMullen and Vivek Sankaran, who was Albertsons’ chief executive at the time of the proposed merger.
The case could have broader implications for major corporate transactions facing regulatory obstacles because merger agreements can impose extensive obligations on parties attempting to secure antitrust approval.
The Albertsons-Kroger dispute puts those commitments directly under scrutiny.
The Delaware court must ultimately determine whether Kroger complied with the obligations it accepted to pursue regulatory approval and, if it did not, what Albertsons is entitled to recover.