WILMINGTON, Delaware — Albertsons and Kroger were out of sync almost from the beginning on the number of stores they would need to divest to secure regulatory approval for their attempted merger, former Albertsons CEO Vivek Sankaram testified Monday on the first day of a trial over which company bears responsibility for the transaction’s failure.
That discord worsened after the rival supermarket chains announced their merger plan in October 2022, damaging their relationships with regulators and leading the Federal Trade Commission and multiple state attorneys general to ask a federal judge to block the deal, Sankaran said. Sankaran was Albertsons’ CEO when the company began talks with Kroger about the deal and led Albertsons throughout the merger review process.
Albertsons is seeking $8 billion from Kroger to settle its claims that Kroger did not live up to its responsibilities under the companies’ merger agreement. The sum includes a $600 million break-up fee and compensation for shareholder losses suffered because the deal failed. Kroger claims that Albertsons is not entitled to the break-up fee or other damages it is demanding.
Sankaran said he felt that dealing with antitrust concerns was “paramount,” adding he was intent on making sure Kroger would bear the most regulatory risk and on moving quickly to limit Alberson’ exposure. Kroger retained control of the companies’ effort to win regulatory approval and was not responsive to Albertsons’ concerns that they were moving too slowly, he said.
Sankaran also said then-Kroger Chairman and CEO Rodney McMullen became harder to reach as the merger-review process dragged on, forcing him to look for alternative ways to communicate Albertsons’ concerns.
In his testimony in the Delaware Court of Chancery on Monday, Sankaran said Albertsons and Kroger had trouble agreeing on the maximum number of stores Kroger would be obligated to divest. Kroger initially wanted to limit that number to between 400 and 450, while Albertsons wanted the limit to be considerably higher than that, he said. The grocers ultimately agreed on a cap of 650.
While Kroger said it would be willing to part with as many as 650 stores to push the deal through, it initially proposed to the FTC that Kroger and Albertsons sell just 238 stores to a divestiture buyer, Sankaran said. That offer started the companies off on the wrong foot because it was much lower than what regulators would want, he said.
“I was really surprised. Kroger had just gone out and told investors this deal was worth it even at 650” stores, Sankaran testified.
By the time Kroger upped the number of stores they planned to divest to 413, the companies had lost credibility with regulators and were also falling behind in their timeline to get the merger approved, Sankaran testified. In addition, Sankaran said he was growing concerned that Kroger was more worried about the performance of the stores it was willing to sell than with how regulators would view the stores through an antitrust lens.
Sankaran also said that in late 2023, he offered to reduce the $24.6 billion merger price the companies had agreed upon by $800 million to help cover the cost of a more robust divestiture package, but “ultimately this went nowhere.”
Sankaran said that Kroger was also not responsive to the FTC's suggested remedies to address the agency's antitrust concerns. In addition, McMullen became less responsive to Sankaran as 2023 wore on, Sankaran testified, adding that he instead reached out to Yael Cosset, Kroger’s then-chief information officer, to express his concerns that Kroger was not taking necessary steps to get the deal approved.
Pressed by Kroger’s attorney under cross-examination to explain why he did not call Ronald Sargent, Kroger’s lead independent director at the time, Sankaran said he was working with the chairman and CEO of Kroger and expected him to be in touch.
Sargent became Kroger’s interim CEO in March 2025, when McMullen abruptly resigned, and remained the company’s chief executive until Greg Foran took over in February.
By the time Kroger agreed to raise its divestiture offer to 579 stores, the FTC and nine states’ attorneys general had already asked a federal judge to block the merger, paving the way for the deal’s collapse in December 2024.
