Albertsons Sues Kroger For 'Breach Of Merger Agreement'
A day after the proposed merger between Kroger and Albertsons was rejected by a federal judge, Albertsons has filed a multi-billion dollar lawsuit claiming, among other things, willful breach of contract.
In a press release issued the morning of December 11, Albertsons said Kroger “willfully breached the merger agreement in several key ways, including by repeatedly refusing to divest assets necessary for antitrust approval, ignoring regulators’ feedback, rejecting stronger divestiture buyers and failing to cooperate with Albertsons.”
A Kroger spokesperson called claims in the lawsuit “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,” the spokesperson said. “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. Kroger looks forward to responding to these baseless claims in court. We went to extraordinary lengths to uphold the merger agreement throughout the entirety of the regulatory process and the facts will make that abundantly clear.”
Additionally, Albertsons has decided to terminate the merger agreement, which company officials said entitles the grocer to a $600 million termination fee.
“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,” said Vivek Sankaran, Albertsons CEO. “We are deeply disappointed in the courts’ decisions.”
In its lawsuit filed in the Delaware Court of Chancery, Albertsons is suing Kroger for what its claims are willful breach of contract and breach of the covenant of good faith and fair dealing arising from Kroger’s failure to exercise “best efforts” and to take “any and all actions” to secure regulatory approval of the companies agreed merger transaction, as was required of Kroger under the terms of the merger agreement between the parties.
Pursuant to the Court of Chancery rules, Albertsons’ complaint against Kroger is temporarily under seal.
“We are taking this action to enforce and preserve Albertsons’ rights and to protect the interests of our shareholders, associates, and consumers,” said Tom Moriarty, general counsel and chief policy officer with Albertsons. “We believe strongly in the merits of our case and look forward to presenting it to the court to hold Kroger responsible for the harm it has caused.”
Albertsons said it is seeking billions of dollars in damages from Kroger to make Albertsons and its shareholders whole. According to the Boise, Id.-based grocer, its shareholders have been denied the multi-billion-dollar premium that Kroger agreed to pay for Albertsons’ shares and have been subjected to a decrease in shareholder value.
