Albertsons Companies, Inc.

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Risks Relating to the Terminated Merger with Kroger

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Our inability to execute on our standalone business strategies following the termination of the Merger Agreement could have a material adverse effect on our business, results of operations, and financial condition.

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The uncertainties and restrictions on our business during the pendency of the Merger limited us from pursuing business opportunities and taking actions during this period. If we are unable to successfully optimize the acceleration of our Customers for Life strategy and other value-creating initiatives, our business, operating results or financial condition could be materially adversely affected.

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The termination of the Merger Agreement and the related legal proceedings may cause us to incur substantial costs and could otherwise adversely affect our business, financial results and operations.

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As disclosed elsewhere in this Form 10-Q, the Company has filed a lawsuit against Kroger in the Delaware Court of Chancery, bringing claims for willful breach of contract and breach of the covenant of good faith and fair dealing arising from Kroger's failure to exercise "best efforts" and to take "any and all actions" to secure regulatory approval, as was required of Kroger under the terms of the Merger Agreement. Kroger also delivered a termination notice to the Company, alleging that the Company's termination notice was not effective, and that Kroger had no obligation to pay the $600 million termination fee because the Company allegedly failed to perform and comply in all material respects with its covenants under the Merger Agreement. In addition to our litigation with Kroger, we may face other lawsuits related to the terminated Merger. We intend to vigorously defend against these and any other legal proceedings arising from the terminated Merger Agreement, but due to the uncertainties inherent in any legal proceedings, we cannot predict an outcome. Also, legal proceedings are expensive and could result in significant costs to us, including any damages we may be required to pay in connection with the lawsuit against Kroger. Such significant damages and our inability to collect the termination fee of $600 million from Kroger could have a material adverse effect on our business, operating results, and financial condition.

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We have incurred significant transaction costs in connection with the terminated Merger which we may not be able to recover, and which could adversely affect our business, financial results and operations.

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We have incurred substantial costs in connection with the terminated Merger. Since the Merger Agreement has been terminated, we will have received little or no benefit in respect of such costs incurred. We may also experience negative reactions from the financial markets and our suppliers, customers, and employees with regard to legal proceedings related to the termination of the Merger Agreement. Any of these factors could have a material adverse effect on our business, operating results, and financial condition or on the trading price of our common stock.

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If we cannot successfully recruit and retain qualified personnel our operating results and stock price may suffer.

Previous report

We believe that our success is directly linked to the competent people in the Company, including our executive officers and other key personnel. Personnel turnover can be costly and could materially and adversely impact our operating results and potentially jeopardize the success of our Customers for Life strategy. Our business and stock price may be adversely impacted if we fail to retain and recruit key personnel.