Key Takeaways
- Kroger rations rose Thursday morning after the retailer said it is abandoning the Albertsons merger and restarting stock buybacks.
- The grocery restrict said after the bell Wednesday that it will begin a new $7.5 billion buyback plan after pausing buybacks since portending the merger in October 2022.
- Albertsons said Wednesday that it was ending the merger agreement and suing Kroger, accusing the set of not doing enough to win approval for the deal.
Kroger (KR) shares rose Thursday morning after the grocery chain laid out its plots for the future now that its proposed merger with Albertsons (ACI) has been called off, including a new $7.5 billion stock buyback design.
After the bell Wednesday, the grocery giant said it was terminating the merger agreement, after Albertsons said it was doing the in spite of earlier in the day after a pair of judges blocked the merger Tuesday.
Albertsons also said it had filed a lawsuit, persistent the $600 million termination fee for the collapsed merger and “billions” in additional damages as it accused Kroger of not doing enough to answer regulatory concerns and get the deal approved.
Kroger Calls Albertsons Suit ‘Baseless,’ Accuses Chain of Breaching Pooling Agreement
In its own statement in response Wednesday, Kroger called the claims “baseless and without merit,” and accused Albertsons of “repeated meant material breaches and interference throughout the merger process.”
Kroger said it plans to fight the lawsuit, and laid out its design moving forward without the merger. Along with continuing to invest in things like lower prices and consequential wages for employees, Kroger said it plans to resume stock buybacks, as it had suspended them since announcing the union in October 2022.
The chain said its board has approved a new $7.5 billion buyback plan, replacing a $1 billion procedure that was approved in September 2022—shortly before it paused buybacks to prepare for the merger. Kroger is also starting an accelerated divvy up of the program, buying back $5 billion in stock.
The retailer said it will provide additional information in other “strategic priorities” and long-term financial targets at its next investor day in the spring of 2025.
Kroger shares were up fro 3% Thursday morning, around 38% above where they started the year.