Kroger–C&S Termination Fee Lawsuit: $125M Claim and Settlement

The Kroger and C&S termination fee lawsuit ended in a confidential settlement. C&S Wholesale Grocers sued Kroger in Delaware Superior Court on March 14, 2025, to collect a $125 million termination fee Kroger refused to pay after the Kroger-Albertsons merger collapsed. Five months later, on August 8, 2025, the companies filed a joint stipulation dismissing the case with prejudice. Neither side disclosed whether Kroger paid the full amount, a reduced sum, or nothing.¹

Where the $125 Million Fee Came From

To win antitrust approval for its $24.6 billion acquisition of Albertsons, Kroger needed a buyer for hundreds of overlapping stores. It chose C&S Wholesale Grocers, a New Hampshire-based distributor and retailer founded in 1918. Their first Asset Purchase Agreement, signed in September 2023, covered 413 stores, eight distribution centers, and several banners for roughly $1.9 billion. It carried a $50 million termination fee payable to C&S if the deal fell through.²³

Regulators pushed back. They questioned whether C&S could really operate the divested stores, citing rebranding costs, the absence of well-known private labels like Signature and O Organics, distribution gaps, and thin IT support. On April 22, 2024, the parties signed an amended agreement expanding the package to 579 stores, adding distribution and a dairy facility, and giving C&S access to Signature and O Organics. The price climbed to roughly $2.9 billion.⁴

The termination fee climbed with it, from $50 million to $125 million. C&S later argued the increase reflected the far larger investment it had to make: retaining KPMG and Bain & Company, dedicating senior executives to depositions and regulatory proceedings, and turning down other business.⁵

The merger died in court on December 10, 2024, when a federal judge in Oregon and a state judge in Washington both blocked it. Albertsons terminated the merger agreement the next day. Kroger then notified C&S that the divestiture agreement was also terminated and refused to pay the fee.⁵

What C&S Claimed

C&S filed suit in Delaware Superior Court’s Complex Commercial Litigation Division, case number N25C-02-077-PAW. The complaint alleged a straightforward breach of contract. Section 11.3(a) of the April 2024 agreement required Kroger to pay the fee within five business days of termination. The contract described the $125 million as “liquidated damages in a reasonable amount” meant to compensate C&S for its committed resources and forgone opportunities. C&S also sought interest at the Wall Street Journal prime rate and up to $2.5 million in attorneys’ fees under the contract’s collection provision.⁵

The contract contained only two carve-outs from the fee: a failure by C&S to secure financing, or a material breach by C&S. Neither applied, C&S said, writing that “Kroger failed to identify any reason for its refusal to pay the Termination Fee it owed C&S — because there is none.”³

Why Kroger Refused to Pay

Kroger called the suit “baseless” and said C&S had “forfeited its right to a termination fee.”³ Kroger’s position rested on several alleged breaches by C&S during the regulatory review:

Backchannel communications between Albertsons COO Susan Morris and C&S CEO Eric Winn, using personal email and cell phones, that Kroger said coordinated a rogue regulatory strategy without its knowledge.
Statements to regulators in which C&S, according to Kroger, “affirmatively criticized” the very divestiture package it had signed onto. Kroger noted the Washington court cited these communications when it blocked the merger.
Operational unpreparedness. Kroger alleged that by September 2024, C&S had submitted applications for only about one-third of the roughly 18,000 licenses and permits it needed to run the stores.
Refusal to give certain landlords basic financial information about lease guarantees.

Kroger developed these allegations at greater length in a separate counterclaim against Albertsons in the Delaware Court of Chancery, filed in late March 2025, describing what it called a “secret and misguided campaign” to undermine the merger’s approval.⁶ Albertsons called those claims “weak” and a “deliberate tactic to distract” from Kroger’s own failures.

How the Case Ended

The lawsuit was short-lived. On August 8, 2025, C&S and Kroger filed a joint stipulation in Delaware Superior Court, and the case was dismissed with prejudice, meaning it cannot be refiled. All settlement terms are confidential. The public record does not show whether any money changed hands.¹⁷

Ron Sargent, then Kroger’s chairman and interim CEO, said the company was “pleased to resolve the claims from C&S” and looked forward to “a friendly relationship with them going forward.”⁸ C&S did not issue a public statement.

The Separate Albertsons Case Is Still Open

The C&S settlement did not end Kroger’s legal exposure from the failed merger. Albertsons filed its own breach-of-contract suit against Kroger in the Delaware Court of Chancery on December 14, 2024, seeking a $600 million reverse termination fee plus additional damages.⁹ Kroger has countersued, arguing that Albertsons’ own misconduct voided its right to that fee.⁶

As of mid-2026, that case remains pending before Chancellor Lori Will. Depositions of key executives, including former Albertsons CEO Vivek Sankaran and current CEO Susan Morris, are largely complete. The parties are awaiting a ruling on a discovery dispute, and unless the sides settle, the case is headed for a bench trial.¹⁰

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