Albertsons and Kroger agree to pause merger amid legal, regulatory challenges
Kroger and Albertsons on Thursday agreed to temporarily pause their proposed $25 billion merger while regulators pursue legal challenges in an effort to block the deal.
The two companies agreed to a temporary injunction that puts the merger on hold while a lawsuit filed by Colorado plays out. The move negates the need for a preliminary injunction hearing that had been scheduled to occur next month.
"The trial is set to begin on Sept. 30 and my office looks forward to making the case that this merger will eliminate competition and impact food prices, jobs, and consumer choice," Colorado Attorney General Phil Weiser said in a statement.
"Today's decision is welcome news as it eliminates the need for a preliminary injunction hearing in Colorado that was previously scheduled to begin August 12," a Kroger spokesperson told FOX Business on behalf of the two companies. "We look forward to defending in court how the combination of Kroger and Albertsons will provide meaningful, measurable benefits, including lower prices and more choices for families across the country and more opportunities for stable, well-paying union jobs."
The two companies have agreed to sell nearly 600 locations to C&S Wholesale Grocers to help secure regulatory approval for the deal and recently released a list of which stores would change hands in the merger. The tie-up would be the largest merger in the history of the grocery store industry.
Albertsons and Kroger initially announced in September 2023 that 413 stores would be sold and increased that number by 166 in April as part of the larger, updated divestiture plan. The plan would also see Kroger and Albertsons part ways with six distribution centers, a dairy plant, certain brands and other non-store assets.
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Kroger CEO Rodney McMullen said in April that the plan is designed to "ensure no stores will close as a result of the merger and that all frontline associates will remain employed, all existing collective bargaining agreements will continue, and associates will continue to receive industry-leading health care and pension benefits alongside bargained-for wages."
Critics of the proposed merger have raised concerns that the deal would result in grocery stores closing, reducing consumers' access to necessities and eliminating jobs while potentially raising prices for food and other products sold at the supermarket.
Colorado was the second state to sue to block the deal, following a move by Washington State in January, while the Federal Trade Commission and eight other states filed a separate suit in late February.
Reuters contributed to this report.
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