More Legal Woes for Kroger
The Kroger Co. has been hit with another lawsuit related to its failed merger with Albertsons Cos. A few months after Albertsons sued its would-be partner for breach of contract after a judge blocked the deal, another player in the scuttled venture is reportedly heading to court in Delaware.
According to a story in The Wall Street Journal, C&S Wholesale Grocers is claiming that Kroger should pay a $125 million termination fee. C&S had a major stake in the deal, planning to pick up nearly 600 Kroger and Albertsons stores, distribution centers and other assets as part of a divestiture plan.
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Per The Wall Street Journal report, C&S argued that Kroger needs to meet the terms of an agreement. "Kroger failed to identify any reason for its refusal to pay the termination fee it owed C&S — because there is none," C&S asserted in a legal filing.
In an email to Progressive Grocer, Kroger maintains that it doesn’t owe the fee. "It is disappointing that C&S has decided to file a baseless lawsuit when it is clear that C&S forfeited its right to a termination fee and has no reasonable claim to any damages. Kroger will vigorously defend itself," a company representative wrote.
C&S was also named in the Albertsons case filed this past December. In its complaint, Albertsons contended that the initial divestiture package was deficient and didn’t take into account C&S’ feedback.
It has been an eventful few weeks for all of the businesses involved in the highly publicized failed merger. Earlier this month, Kroger CEO Rodney McMullen stepped aside after an internal investigation determined that his unspecified personal conduct went against the company’s ethics policy. On the same day, Albertsons revealed that CEO Vivek Sankaran is retiring and will be succeeded by EVP and COO Susan Morris. In February, it came to light that C&S is part of a private consortium with Southeastern Grocers (SEG) CEO and President Anthony Hucker that acquired Southeastern Grocers and its Winn-Dixie and Harveys Supermarket banners from ALDI U.S.
The Kroger Family of Companies’ nearly 420,000 associates serve more than 11 million customers daily through a digital shopping experience and retail food stores under a variety of banner names. The Cincinnati-based grocer is No. 4 on The PG 100, Progressive Grocer’s 2024 list of the top food and consumables retailers in North America. PG also named Kroger one of its Retailers of the Century. Keene, N.H.-based C&S is the largest grocery wholesale distributor in the United States, and the eighth-largest privately owned company. It services customers of all sizes, supplying more than 7,500 independent supermarkets, chain stores, military bases and institutions with over 100,000 different products. C&S also operates and supports corporate grocery stores and services independent franchisees under a chain-style model throughout the Midwest, South and Northeast. The company is No. 18 on The PG 100. As of Nov. 30, 2024, Albertsons Cos. operated 2,273 retail food and drug stores with 1,732 pharmacies, 405 associated fuel centers, 22 dedicated distribution centers and 19 manufacturing facilities. The Boise, Idaho-based company operates stores across 34 states and the District of Columbia under more than 20 well-known banners. Albertsons is No. 9 on PG’s 2024 list.
