On Wednesday, Albertsons Companies, Inc. announced it would officially terminate its pending $25 billion merger agreement with Kroger, Supermarket News reported. This decision followed rulings from two courts blocking the long-pending merger deal.

Albertsons is now suing Kroger for billions of dollars, claiming Kroger refused to offer an adequate divestiture package and repeatedly ignored regulators' concerns. These actions, Albertsons representatives said, ultimately blocked the merger.

On Tuesday, the U.S. District Court in Oregon and the King County Superior Court in Washington issued injunctions halting the merger of the country's two largest grocers, which was first announced in 2022.

In a lawsuit filed Wednesday in the Delaware Court of Chancery, Albertsons accused Kroger of willfully breaching the merger contract by failing to take "any and all actions" to secure regulatory approval.

Kroger called Albertsons' lawsuit "baseless and without merit," saying it "went to extraordinary lengths to uphold the merger agreement" throughout the regulatory process.

Albertsons' general counsel, Tom Moriarty, said Kroger acted in its own financial self-interest, providing insufficient divestiture proposals that ignored regulators' concerns, harming Albertsons' shareholders, associates, and consumers.

Albertsons is seeking billions in damages, including a $600 million termination fee, as well as restitution for the time and resources devoted to obtaining merger approval. CEO Vivek Sankaran expressed deep disappointment in the court's decision to block the merger.

Despite the setback, Albertsons provided financial guidance projecting annual identical sales growth of 1.8% to 2.2%, adjusted EBITDA of $3.90 to $3.98 billion, and capital expenditures of $1.8 to $1.9 billion. The company also announced a 25% increase in its quarterly dividend and a $2 billion share repurchase program.

Albertsons' largest shareholder, Cerberus Capital Management, stated it remains confident in the company's strength as a standalone business and has no plans to sell its shares, despite being disappointed by the court's rulings.

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