Kroger’s Acquisition of Albertsons is Blocked

This. Just. In. Kroger will not acquire Albertsons in what would have been the largest supermarket merger in U.S. history. 

ICYMI: Kroger planned to purchase Albertsons for $24.6B.

If you can’t beat them, join buy them: Kroger’s proposed purchase of Albertsons would have drastically reduced competition, causing food prices to soar. 

Court rulings: In a three week “mini-trial” in August and September, U.S. District Court Judge Adrienne Nelson of Oregon granted a preliminary injunction to block the merger until the FTC’s in-house judge could make a decision. Her decision “protects competition in the grocery market, which will prevent prices from rising even more,” according to an FTC spokesman.

Simultaneously, Superior Court Judge Marshall Ferguson of Washington state said the deal was a no-go, issuing a permanent injunction against the merger within the state. Ferguson called the merger “unlawful.”

Soundbite: “This statement win makes it clear that strong, reality-based antitrust enforcement delivers real results for consumers, workers, and small businesses.” — Douglas Farrar, F.T.C. spokesman

Meanwhile, Albertsons has filed a lawsuit against Kroger citing “breach of contract and breach of the covenant of good faith and fair dealing.” Kroger says it will fight the allegations in court, claiming the competitor grocery chain had numerous intentional material breaches and interference during the merger process.

No chump change: The merger termination gives Albertsons $600M immediately in termination fees, but the company is looking for billions in damages to make “Albertsons and its shareholders whole.” 

Background: Kroger owns more than 2,700 stores under more than 20 banners (Fred Meyer, Harris Teeter, Ralphs). It was ranked the second-largest grocer by sales, while Albertsons was fourth. Albertsons owns more than 2,200 stores, including the likes Safeways and Vons in 34 states and D.C.