Kroger poured more than $1 billion over three years into its unsuccessful quest to combine with rival Albertsons, the supermarket chain disclosed in a regulatory filing last week.
The expenses primarily consisted of third-party professional fees and credit facility fees Kroger incurred as it sought to obtain regulatory approval for the proposed merger, which drew fierce opposition from the Federal Trade Commission and state attorneys general on the grounds that it would be anticompetitive.
In its annual 10-K report for 2024, filed with the Securities and Exchange Commission on April 1, Kroger said it recorded $684 million in merger-related costs last year. That amount was on top of $316 million the company spent on fees and other expenses related to the merger in 2023, as well as $44 million it devoted to the deal in 2022.
Kroger also said it took on $34 million in interest expenses in 2024 related to $10.5 billion the company borrowed in preparation for its acquisition of Albertsons. Kroger directed the bulk of the borrowed funds to the share-buyback program it implemented after the merger fell apart.
Kroger and Albertsons announced their intention to combine in a deal valued at $24.6 billion in October 2022, sparking swift and loud blowback from a range of foes that included labor groups and politicians as well as government antitrust officials. The FTC sought a federal court order to stop the merger, while the attorneys general of Washington state and Colorado asked state courts to block the deal. On Dec. 10, a federal judge granted the FTC’s request to halt the deal and a judge in Washington also ruled against the merger.
Kroger now faces the cost of defending itself against a lawsuit Albertsons filed accusing it of sabotaging the merger by not taking more aggressive steps to assuage the FTC’s concern that the deal would have created an overly powerful supermarket company. Albertsons is also seeking to collect a $600 million termination fee from Kroger.
Meanwhile, C&S Wholesale Grocers, which had agreed to acquire almost 600 grocery stores as part of a divestiture deal related to the merger, wants a $125 million termination fee. Kroger contends that Albertsons and C&S forfeited those fees, which were specified in the merger agreement, because they took actions that went afoul of the deal’s terms.
