Kroger's former CEO testified that the $24.6B Albertsons merger was doomed from the start

Former Kroger CEO Rodney McMullen testified on Tuesday that the company's $24.6 billion merger with Albertsons was "doomed from the beginning," according to Bloomberg.

McMullen told Delaware Chancery Court Vice Chancellor Lori Will that the Federal Trade Commission's stiff resistance to mergers under then-Chair Lina Khan sank the deal, according to Bloomberg. A federal court sided with the FTC and blocked the transaction in December 2024, and Albertsons then called it off.

Will is presiding over a trial that will settle whether Kroger bears the blame for the deal falling apart. Roughly 30 people are expected to take the stand during the two-week proceeding, according to Bloomberg.

McMullen said he worked out both the $600 million termination fee and the cap of 650 stores to be divested in talks with Stephen Feinberg, who formerly led Cerberus Capital Management, the biggest shareholder in Albertsons, according to Bloomberg. He pushed back on the suggestion that he was slow to respond to Albertsons, explaining that he turned to Kroger colleagues better versed in particular topics when questions came up.

An Albertsons lawyer challenged McMullen on how much say he had in assembling the stores to be sold, highlighting several occasions when he remarked on the economics of specific locations. McMullen characterized his part in choosing stores as "limited," saying he raised queries on just five locations and never pushed for alterations to the packages, according to Bloomberg. He said Kroger leaned on its antitrust counsel to pick which stores and assets would be divested, and that the company would have offered 650 locations had the FTC requested that many.

The failed deal did not stem from an unwillingness to divest more stores, McMullen testified, according to Law.com.

Albertsons sued Kroger, alleging it violated the terms of the deal by not putting forward enough assets for sale and by concentrating on internal profit goals, according to Bloomberg. Albertsons wants more than $9.3 billion. That total combines the $600 million fee along with interest and costs, and more than $8 billion representing the premium stockholders stood to receive, along with taxes owed on that windfall. To collect damages, Albertsons has to show that Kroger's breach of the agreement was a knowing one.

Kroger says its pursuit of the merger and its court battle against regulators cost it over $1 billion, according to Bloomberg.

On Monday, former Albertsons CEO Vivek Sankaran testified before the judge that Kroger fell short of making every effort to secure approval and that McMullen became harder to reach as regulatory obstacles piled up, according to Bloomberg. McMullen stepped down in March 2025 in the wake of a board probe of his personal behavior. He said his exit was unrelated to the deal or to how he performed in the job.

Kroger argues the merger would not have won approval under Khan. It also contends Albertsons is not entitled to the termination fee because Albertsons undermined Kroger's position with regulators through secret communications with C&S Wholesale Grocers.