Washington state moves to block Kroger-Albertsons merger

The Washington State Attorney General has filed a lawsuit to block the merger of grocery chains Kroger (NYSE:KR) and Albertsons (NYSE:ACI), confirming a report from last week.

The suit argued that the $25B deal would raise prices and hurt consumers. Kroger and Albertsons have more than 300 locations in Washington and make up more than half of the state's grocery sales.

Kroger (KR) said on Monday it was pushing back the deal timeline citing ongoing negotiations with the Federal Trade Commission and individual state attorneys general. It now anticipates the transaction to close in the first half of its fiscal year.

The Kroger statement noted: "While this is longer than we originally thought, we knew it was a possibility and our merger agreement and divestiture plan accounted for such potential timing. We remain committed to closing the transaction and providing the meaningful and measurable benefits that we promised when we originally announced the transaction."

While the Washington AG's lawsuit warns of higher prices, Kroger said in its latest statement the deal would bring "lower prices and more choices for more customers". The firm has pledged to invest $500M to reduce prices immediately following the merger, as well as an incremental $1.3B to "enhance the customer experience".

Kroger (KR) also said there would be no store closures or frontline associates laid off as a result of the merger. In addition, it will invest an incremental $1B to raise wages and benefits for all associates.

This is notable because the Washington state lawsuit has been endorsed by United Food & Commercial Workers, Local 3000, which represents Kroger and Albertsons (ACI) employees in the state, according to The Seattle Times.