Albertsons sues Kroger for failing to win approval of their proposed supermarket merger

Kroger and Albertsons' plan for the largest U.S. supermarket merger in history crumbled Wednesday, with Albertsons pulling out of the $24.6 billion deal and the two companies accusing each other of not doing enough to push their proposed alliance through.

Albertsons said it had filed a lawsuit against Kroger, seeking a $600 million termination fee as well as billions of dollars in legal fees and lost shareholder value. Kroger said the claims were “baseless” and that Albertsons was not entitled to the fee.

“After reviewing options, the company determined it is no longer in its best interests to pursue the merger,” Kroger said in a statement Wednesday.

The bitter breakup came the day after two judges halted the proposed merger in separate court cases. U.S. District Court Judge Adrienne Nelson in Oregon issued a preliminary injunction Tuesday blocking the merger until an in-house judge at the Federal Trade Commission could consider the matter.

An hour later, Superior Court Judge Marshall Ferguson in Seattle issued a permanent injunction barring the merger. Ferguson ruled that combining Albertsons and Kroger would lessen competition and violate consumer-protection laws.

The companies could have appealed the rulings or proceeded to the in-house FTC hearings. Albertsons' decision to pull out of deal instead surprised some industry experts.

“I’m in a state of professional and commercial shock that they would take this scorched earth approach,” said Burt Flickinger, a longtime analyst and owner of retail consulting firm Strategic Resource Group. “The logical thing would have been for Albertsons to let the decision sink in for a day and then meet and see what could be done. But the lawsuit seems to make that a moot issue.”

Albertsons is unlikely to find another merger partner because it has significant debt and underperforming stores in most of its markets., Flickinger said. Consumers will feel the most immediate impact of the deal's demise, he said, since Albertsons charges 12% to 14% more than Kroger and other grocery rivals.

“They had so much debt they had to pay it off it's reflected in their pricing and promotional structure,” Flickinger said.

Albertsons CEO Vivek Sankaran testified during the federal hearing in September that his company might consider “structural options” like laying off employees, closing stores and exiting certain markets if the merger with Kroger didn’t go through.

“I would have to consider that,” he said. “It’s a dramatically different picture with the merger than without it.”

But in a statement Wednesday, Sankaran said Albertsons would “start this next chapter in strong financial condition with a track record of positive business performance." In the company's most recent quarter, Albertsons' revenue rose 1% to $18.5 billion and it reported $7.9 billion in debt.

Kroger said it would also move forward in a strong financial position, with revenue down slightly to $33.6 billion in its most recent quarter. The company announced a $7.5 billion share buyback program Wednesday after a two-year pause.

Kroger and Albertsons first proposed the merger in 2022. They argued that combining would help them better compete with big retailers like Walmart, Costco and Amazon, which are gaining an increasing share of U.S. grocery sales. Together, Kroger and Albertsons would control around 13% of the U.S. grocery market. Walmart controls around 22%.

Under the merger agreement, Kroger and Albertsons — who compete in 22 states — agreed to sell 579 stores in places where their locations overlap to C&S Wholesale Grocers, a New Hampshire-based supplier to independent supermarkets that also owns the Grand Union and Piggly Wiggly store brands.

But the Federal Trade Commission and two states — Washington and Colorado — sued to block the merger earlier this year, saying it would raise prices and lower workers' wages by eliminating competition. It also said the divestiture plan was inadequate and that C&S was ill-equipped to take on so many stores.

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 transaction.

Albertsons said Kroger refused to divest the assets necessary for antitrust approval, ignored regulators' feedback and rejected divestiture buyers that would have been stronger than C&S.

“Kroger’s self-serving conduct, taken at the expense of Albertsons and the agreed transaction, has harmed Albertsons’ shareholders, associates and consumers,” said Tom Moriarty, Albertsons’ general counsel, in a statement.

Kroger said that it disagrees with Albertsons “in the strongest possible terms.” It said early Wednesday that Albertsons was responsible for “repeated intentional material breaches and interference throughout the merger process.”

Kroger, based in Cincinnati, Ohio, operates 2,800 stores in 35 states, including brands like Ralphs, Smith’s and Harris Teeter. Albertsons, based in Boise, Idaho, operates 2,273 stores in 34 states, including brands like Safeway, Jewel Osco and Shaw’s. Together, the companies employ around 710,000 people.

Kroger sued the FTC in August in federal court in Ohio, claiming that the federal agency’s in-house administrative hearings were unlawful because the FTC was also able to challenge the merger in federal court in Oregon. In paperwork filed Wednesday, the FTC said it expected to update the court on its next steps in that case by Dec. 17.

In Colorado, which also sued to block the merger, Attorney General Phil Weiser said Tuesday that he still was awaiting a decision from a state judge. In that case, Colorado also was challenging an allegedly illegal no-poach agreement Kroger and Albertsons made during a 2022 strike.

Shares of Albertsons fell 1.5% Wednesday, while Kroger's stock was up 1%.

FILE - The exterior of Kroger's fulfillment center is shown on July 27, 2022 in Dallas, Tex. (Rebecca Slezak/The Dallas Morning News via AP, File)

FILE - A grocery cart rests in a cart return area with a sign for Albertsons grocery store in the background on Aug. 26, 2024, in Lake Oswego, Ore. (AP Photo/Jenny Kane, File)

FILE - The entrance to an Albertson's grocery store is shown on Aug. 24, 2024, in Cheyenne, Wyo. (AP Photo/David Zalubowski, File)

FILE - The exterior of Kroger's fulfillment center is shown on July 27, 2022 in Dallas, Tex. (Rebecca Slezak/The Dallas Morning News via AP, File)

A shopper heads into a Safeway store, which is part of the Albertson's grocery chain, Tuesday, Dec. 10, 2024, in Denver. (AP Photo/David Zalubowski)

PITTSBURGH (AP) — Mike Tomlin started going down the checklist of the myriad ways Saquon Barkley can beat you. It took the Pittsburgh Steelers coach a while — by his usually measured standards anyway — to get to the end.

“He’s got top-end speed," Tomlin said of the Philadelphia Eagles star and NFL's leading rusher. "He can hit the home run ... He’s good in tight spaces. He can get downhill. He can lower his pads. He’s got good lateral abilities. He can make people miss. He’s just a really complete player.”

So complete that Tomlin used the honorific “Mr. Barkley” when describing the challenge that awaits the first-place Steelers (10-3) when they visit the NFC East-leading Eagles (11-2) on Sunday.

“He’s been dominant,” Tomlin said. “Eye-opening at times.”

Physics defying, too. It's one of the reasons Tomlin isn't worried about his team getting too caught up in the big picture as Pittsburgh begins a stretch of three games in 11 days that starts with the Eagles, ends with Kansas City on Christmas and features a trip to AFC North rival Baltimore in between.

The way Tomlin figures, get caught looking down the road and you'll likely just end up as another hapless victim on Barkley's burgeoning highlight reel.

“If you don’t minimize him in some way, you’re not even going to position yourself to have a chance to be successful," Tomlin said.

Most teams haven't this season, though Pittsburgh and the NFL's fourth-ranked rush defense believes it has the tools to be the exception. Tools like inside linebacker Elandon Roberts, who has carved out a niche as an old-school run stopper over the last decade, or “tooth chipper,” as Tomlin put it earlier this season.

Tomlin saw it nearly a decade ago when he was scouting Roberts out of Houston. There was something about Roberts' willingness to stick his 6-foot-1 frame into uncomfortable places that stuck with Tomlin, so much so that when Roberts hit free agency in the spring of 2023, the Steelers practically sprinted to the bargaining table.

Roberts has been just as advertised, a veteran who welcomes the dirty work his job entails. Against Dallas earlier this season, that meant vaulting over the line of scrimmage to stop Cowboys running back Rico Dowdle in his tracks, leading to a fumble that could have sealed the game had Dallas quarterback Dak Prescott not fallen on it.

Asked what's made him so effective through the years, Roberts shrugged.

“I just think when you’re good at something, you know, you hone in on it,” he said.

He's hardly the only one on a defense that has slowed down Lamar Jackson, Derrick Henry, Nick Chubb and J.K. Dobbins among others this season.

Longtime defensive tackle Cam Heyward is playing some of the best football of his career at 35. Second-year defensive lineman Keeanu Benton is starting to come into his own. Patrick Queen, signed in the offseason to play alongside Roberts, is Pittsburgh's best three-down linebacker since Ryan Shazier's career ended with a spinal injury in December 2017.

Queen is well aware the Steelers will need all 11 players on the field — whomever it might be on a given down — to work in tandem to keep Barkley from taking over.

“Everybody's got to do their job,” Queen said. “That’s really all it comes to. I think some teams are just unaware of how good Saquon is. You’ve got to keep your focus.”

And your head up.

Barkley's reverse hurdle against Jacksonville earlier this season went viral, leading the makers of the “Madden NFL” video game series to incorporate it into an update the following week.

There's one easy way — in theory — to stop Barkley from embarrassing you.

“If you want to hit somebody, you’ve got to see what you’re hitting,” Queen said.

Sometimes with Barkley, even that isn't enough. While he plays behind one of the NFL's best offensive lines and benefits from having a dual-threat quarterback in Jalen Hurts lining up next to him, there's a reason he is, as Tomlin put it, “the most significant acquisition in the NFL in 2024.”

Barkley is threatening the single-season rushing record of 2,105 yards that Eric Dickerson set 40 years ago after arriving in free agency from the New York Giants. While Philadelphia's passing offense is very much a work in progress — Hurts threw for just 108 yards last week against Carolina — Barkley has been the engine that's driven the Eagles' nine-game winning streak.

“For him to find a new team and get to that part in his career (and chase records), it’s something that you don’t see,” Queen said. "We’ve got to go up there and play physical football.”

Something that's never been a problem for Roberts.

“I enjoy it,” he said. “I don’t know if you want a linebacker on your team that doesn't like the physicality part.”

NOTES: WR George Pickens (hamstring) and S DeShon Elliott (hamstring) and DT Larry Ogunjobi (groin) did not practice Wednesday. ... DT Montravius Adams (knee) was a full participant as he nears a return from a stint on injured reserve.

AP NFL: https://apnews.com/hub/NFL

Philadelphia Eagles running back Saquon Barkley (26) runs with the ball during the first half of an NFL football game against the Carolina Panthers on Sunday, Dec. 8, 2024, in Philadelphia. (AP Photo/Derik Hamilton)