July 25 (Reuters) - The proposed $25 billion merger of

Kroger ( KR ) and Albertsons ( ACI ) has been halted until the Colorado

District Court rules on a lawsuit filed to block the deal that

is expected to push up grocery prices, State Attorney General

Phil Weiser said on Thursday.

"The trial is set to begin on Sept. 30 and my office looks

forward to making the case that this merger will eliminate

competition and impact food prices, jobs, and consumer choice,"

Weiser said in a statement.

Colorado's lawsuit, filed at the beginning of February, was

earlier set for a hearing on Aug. 12. Washington State's

attorney general was the first to challenge Kroger's ( KR ) proposed

buying of smaller rival Albertsons ( ACI ) in January.

The U.S. Federal Trade Commission and eight other states

separately said in late-February they were suing to block the

supermarket mega-merger, which was announced in October 2022 and

expected to create a grocery empire with more than 4,000 stores.

U.S. District Judge Adrienne Nelson in March had set Aug. 26

as the start of a hearing on the FTC's bid for a preliminary

injunction to challenge the deal.

Bloomberg News earlier reported that a Colorado District

Court judge granted a preliminary injunction halting the deal at

a hearing in Denver on Thursday and canceled the hearing set for

next month.

Kroger ( KR ) and Albertsons ( ACI ) did not immediately

respond to Reuters' requests for comment.

The companies had said in April they were expanding their

planned sale of grocery stores to get regulatory approval and

would offload 166 more locations than previously agreed upon to

C&S Wholesale Grocers.

They would now sell 579 stores to C&S and give it access to

Albertsons Signature and O Organics private-label brands.

Shares of Kroger ( KR ) were down about 1%, while Albertsons ( ACI ) was up

marginally.