Jewel-Osco Owner Sues Mariano's Parent Company Over Failed Merger

CHICAGO — Jewel-Osco parent company Albertsons is suing Mariano’s parent company Kroger after a $24.6 billion merger of the grocery giants was blocked in court.

The merger, announced in 2022, was barred Tuesday by judges in Oregon and Washington following a lawsuit by the Federal Trade Commission that argued the companies compete in 22 states. Albertsons and Kroger said the merger would allow them to better compete against retailers like Walmart, Costco and Amazon.

“Rather than fulfill its contractual obligations to ensure that the merger succeeded, Kroger acted in its own financial self-interest, repeatedly providing insufficient divestiture proposals that ignored regulators’ concerns,” Albertsons General Counsel and Chief Policy Officer Tom Moriarty said in a news release Wednesday announcing the lawsuit.

“We are disappointed that the opportunity to realize the significant benefits of the merger has been lost on account of Kroger’s willfully deficient approach to securing regulatory clearance.”

Albertsons, which has over 2,200 stores, is seeking billions in damages and a $600 million termination fee for ending the merger agreement.

Kroger, which has 2,800 stores, in response called Albertsons’ claims “baseless and without merit.”

“This is clearly an attempt to deflect responsibility following Kroger's written notification of Albertsons' multiple breaches of the agreement, and to seek payment of the merger's break fee, to which they are not entitled,” the company said in a prepared statement.

“We went to extraordinary lengths to uphold the merger agreement throughout the entirety of the regulatory process and the facts will make that abundantly clear.”

Kroger’s Board of Directors is considering next steps, according to the company.

As part of the deal blocked Tuesday, the companies had agreed to sell almost 600 stores and other facilities nationwide — including 35 Jewel-Osco and Mariano’s locations in the Chicago area — to C&S Wholesale Grocers, which owns Piggly Wiggly. With the merger terminated, the sale will not happen.