Kroger CEO admits merger had little chance of approval

Rodney McMullen, Kroger’s former CEO, testified in Delaware Chancery Court that the company’s $24 billion merger with Albertsons stood almost no chance of approval from regulators, especially under Federal Trade Commission Chair Lina Khan. Speaking to Judge Lori Will on Tuesday, McMullen said he had just a small role in selecting which stores to be divested and that he did not have a good feeling about the deal from the get-go, mainly because of Khan’s opposition to mergers. McMullen told the judge that Khan opposed mergers for the most part and that he thought the deal with Albertsons was dead on arrival.

The company initially proposed selling 238 stores to address antitrust concerns, but that figure later ballooned to 579 as regulatory pressure grew. Even with the expanded plan-reaching up to 650 stores-McMullen admitted Kroger’s efforts fell short of what regulators demanded. Albertsons criticized Kroger’s selection of stores, which were to be acquired by C&S Wholesale Grocers, citing them as the weakest performers and chosen to ensure that the stores that Kroger retained were the most profitable.

After the merger’s collapse in December 2024, Albertsons sued Kroger to recover the $600 million breakup fee outlined in the original agreement. The lawsuit later expanded to seek over $8 billion in damages, claiming Kroger’s failure to secure approval had destroyed shareholder value. Albertsons also claims that Kroger failed to heed the FTC’s advice for supermarket divestitures and did not adequately engage with the state attorneys general who were looking into the merger.

Kroger, meanwhile, said it invested more than $1 billion into pushing for the merger, but was up against regulators who were determined to block the deal. The original agreement set the maximum number of divestitures at 650 stores, but Kroger said it would have had to divest more than that to satisfy a challenging antitrust investigation that included an overly narrow view of the competitive grocery environment.

Key witnesses in the proceedings will include Ted Hassi, Albertsons’ legal advisor, and Michael Bernstein, who advised Kroger on antitrust strategy. Earlier testimony was provided by Tom Moriarty, Albertsons’ executive VP of mergers and acquisitions, and former Albertsons CEO Vivek Sankaran.