In a move that has stunned retail analysts and rattled the grocery industry, Kroger has disclosed it spent over $1 billion in a failed bid to acquire rival supermarket chain Albertsons — an ambitious merger that regulators ultimately blocked, yet one whose ripple effects continue to be felt across the U.S. food retail landscape.
The Cincinnati-based retail giant revealed in a recent U.S. Securities and Exchange Commission (SEC) filing that the proposed $25 billion merger with Albertsons, first announced in October 2022, has cost the company dearly. The breakdown of the billion-dollar loss shows $684 million spent in 2024 alone, primarily on third-party legal and advisory fees, alongside $316 million in 2023 and $44 million in 2022.
A Costly Gamble on Consolidation
The failed merger was one of the most expensive attempted consolidations in recent grocery retail history. The strategic rationale behind Kroger’s bid was clear: uniting with Albertsons would create a supermarket powerhouse capable of competing with giants like Walmart and Amazon. Combined, Kroger and Albertsons operate nearly 5,000 stores and employ hundreds of thousands of workers across the United States.
But regulators weren’t convinced. Antitrust lawsuits filed by the Federal Trade Commission (FTC) and attorneys general from multiple states argued the merger would reduce competition, potentially increase grocery prices, and result in widespread job losses. Court proceedings stretched from Seattle to Portland throughout late 2024, culminating in two separate court rulings in December that blocked the deal. Albertsons officially terminated the merger a day later.
More Than Just Legal Fees
Kroger’s billion-dollar bill was not limited to lawyer invoices. The grocer had also secured expensive credit facilities to finance the deal and had entered into agreements with C&S Wholesale Grocers, which had planned to purchase nearly 600 stores as part of a divestiture plan to appease regulators. Following the collapse, C&S filed a lawsuit in Delaware, demanding a termination fee.
Albertsons, for its part, wasted no time retaliating — suing Kroger for damages, alleging the Ohio-based chain failed to secure regulatory approval in good faith.
Leadership Shake-Ups and Job Cuts
The fallout hasn’t just been financial. In March, Kroger’s long-serving CEO Rodney McMullen resigned amid an internal investigation into conduct that reportedly violated the company’s code of ethics. Former Staples CEO and Kroger board member Ron Sargent has stepped in as interim chief while a permanent replacement is sought.
Meanwhile, both Kroger and Albertsons have quietly begun reducing headcount, further highlighting the instability created by the failed merger.
A Merger Still Needed for Long-Term Survival?
While the merger is legally dead, analysts warn that its economic and strategic necessity remains very much alive. Both Kroger and Albertsons face growing pressure from online players like Amazon Fresh, warehouse giants such as Costco, and discount-driven newcomers like Aldi and Lidl. The grocery sector is undergoing seismic change, and consolidation is seen by many insiders as not just a growth strategy, but a matter of survival.
Some experts argue that without consolidation, traditional supermarket chains may struggle to keep prices low while managing razor-thin margins in a high-inflation environment.
“The real tragedy of this failed merger is that the logic behind it was sound,” said one retail consultant. “Without scale, supermarkets like Kroger and Albertsons may slowly lose ground to more agile, tech-savvy competitors.”
What’s Next for Kroger?
As Kroger begins picking up the pieces of its abandoned merger, it remains to be seen how the company will redirect its resources. With over 409,000 employees nationwide and 76 stores in Greater Cincinnati and Northern Kentucky alone, the grocer still has a significant national footprint.
However, with a billion-dollar hole in its balance sheet and mounting legal costs, strategic missteps are no longer affordable.
The collapsed Kroger-Albertsons merger serves as a stark reminder of the high stakes involved in corporate consolidation, especially in heavily regulated and consumer-sensitive sectors like grocery retail. While the merger may have failed on paper, the underlying pressures that led to it are only intensifying — and the industry may yet see renewed efforts at consolidation in the not-so-distant future.
