State attorney general sues to block Albertsons’ $4 billion dividend payout

The attorneys general of California, Illinois and the District of Columbia are suing the Albertsons in an effort to prevent the grocery chain from paying a dividend of nearly $4 billion to its shareholders.

The lawsuit, filed Wednesday in US District Court in Washington, DC, asks the court to block the payment until the attorney general reviews Albertsons’

proposed merger with Kroger Co.
+ 1.42%

The lawsuit is the second this week seeking to delay dividend payments. Washington State Attorney General Bob Ferguson filed a similar lawsuit in state court on Tuesday.

Boise, Idaho-based Albertsons said Wednesday that both lawsuits have no basis.

Kroger announces plans to buy Albertsons for $20 billion last month. The deal is expected to close in early 2024 if it is approved by the Federal Trade Commission and the Department of Justice and any court challenges survive.

The merger agreement includes a special dividend of up to $4 billion __ or $6.85 per share __ that Albertsons is expected to pay to its shareholders on Monday.

Democratic Attorney Generals of California, Washington, Illinois and the District of Columbia, as well as Republican Attorney Generals of Arizona and Idaho, sent a letter to Albertsons last week asking the company to delay the payment.

The attorney general said that a dividend __ of nearly a third of Albertsons’ $11 billion market value __ would deprive the company of the cash it needs to operate while regulators consider a merger. import.

“Albertsons’ rush to secure a record-setting payday for its investors threatens the jobs of County residents and access to affordable food and groceries in these areas. neighborhoods have no alternatives,” DC Attorney General Karl Racine said in a statement.

The attorney general also said that it is unclear whether the deal will pass, as federal and state laws prohibiting mergers significantly reduce competition. Together, the Cincinnati-based Albertsons and Kroger will control about 13% of the US grocery market.

Albertsons said the dividend has been approved by its board and will be paid whether or not regulators approve the merger. The company denied that the dividend would hinder its ability to invest in stores. It had nearly $29 billion in assets at the end of September, including $3.4 billion in cash and cash equivalents.

“Given our financial strength and positive business outlook, we are confident that we will maintain our strong financial position as we work to close the merger,” Albertsons said. said in a statement.


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