Grocery giant Kroger (KR) has reached a settlement with C&S Wholesale Grocers, ending a legal dispute tied to the failed $25 billion merger with Albertsons (ACI). C&S Wholesale had sued Kroger, claiming it was owed a $125 million termination fee after the merger was called off. The settlement terms were not disclosed, and C&S agreed not to sue Kroger again over the same issue.
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“We are pleased to resolve the claims from C&S, and we look forward to a friendly relationship with them going forward,” said Kroger’s Interim CEO, Ron Sargent.
C&S sued Kroger in March, arguing that the latter’s failure to complete its merger with Albertsons prevented C&S from acquiring nearly 600 stores and other assets. It must be noted that this acquisition was a key part of the divestiture plan to secure regulatory approval for the Kroger-Albertsons deal.
Legal Headwinds Still Loom for Kroger
Despite this settlement, Kroger’s legal troubles are not over. Albertsons has also filed a lawsuit, claiming Kroger mishandled the merger approval process and seeking a $600 million breakup fee.
The lawsuit also mentions Kroger’s former CEO Rodney McMullen, who suddenly resigned earlier this year during an ethics investigation. Kroger has stated that McMullen’s exit was “inconsistent” with its ethics policy, but Albertsons argues that his ethical conduct during the merger approval process is relevant to their lawsuit.
Is Kroger Stock a Good Buy Now?
Turning to Wall Street, KR stock has a Moderate Buy consensus rating based on 24 Buys and four Holds assigned in the last three months. At $76.88, the average Kroger stock price target implies 3.08% upside potential.
