Albertsons sues Kroger over their broken merger, and Khan’s FTC scores a final win
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If it please the cart… it doesn’t. After a federal judge blocked the $25B merger between two of America’s largest grocery chains, Albertsons wants Kroger to know “it’s not me, it’s you.” Albertsons yesterday officially backed out of the deal and sued Kroger for billions, accusing its larger peer of not doing enough to appease regulators. The grocers spent a combined $1B+ on the deal over the past two years to walk down the merger aisle.
Cleanup: In July, the supermarket chains agreed to sell about 600 stores to a small rival to placate regulators, but Albertsons is accusing Kroger of not agreeing to divest from more locations.
Checked out: The merger would’ve created a $200B grocery behemoth with 720K employees, which regulators said could’ve suppressed wages and created local monopolies. The chains argued it was necessary to compete with Amazon, Walmart, and Costco.
End of an era… The decision to block the Kroger-Albertsons merger is a victory for the Biden admin’s FTC, helmed by Lina Khan, and it could be its last hurrah. Under Khan the FTC (along with the DOJ’s antitrust division) cracked down on Big Tech, Big Aviation, Big Healthcare, and even Big Mattress. The admin’s antitrust regulators brought a record level of merger challenges, with enforcers opposing 4x the number of billion-dollar mergers as the previous two admins did. Still, M&A may make a comeback soon…
Timing’s everything… Goldman Sachs analysts expect mergers to spike 20% in President-elect Trump’s first year. Andrew Ferguson, Trump’s pick to lead the FTC, is expected to be friendlier to M&A than Khan. As a Republican commissioner in Khan’s FTC, he voted against several of the agency’s rules. After Trump’s election win, shares of several ready-to-merge companies (including Frontier, Discover, and Capital One) climbed.