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Albertsons says Washington AG denied request for injunction to stop dividend payout

Published 12/09/2022, 10:36 PM
Updated 12/10/2022, 08:15 AM
© Reuters. FILE PHOTO: The Albertsons logo is seen on an Albertsons grocery store, as Kroger agrees to buy rival Albertsons in a deal to combine the two supermarket chains, in Rancho Cucamonga, California, U.S., October 14, 2022. REUTERS/Aude Guerrucci

(Reuters) -U.S. grocery chain Albertsons Companies Inc said that Washington State Court had denied a request of preliminary injunction by the state's Attorney General to prevent the company from paying $4 billion to shareholders in a special dividend.

The court has extended the existing temporary restraining order until Dec. 19 to give the Attorney General an opportunity to appeal, the company said late on Friday.

It awaits a ruling on the request for another preliminary injunction filed on Dec. 1 by the California, Illinois and District of Columbia Attorneys General against the previously announced $6.85 per share dividend, according to a statement.

Albertsons said it continues to believe that the claims are "meritless and provides no legal basis for preventing the payment of a dividend."

Kroger (NYSE:KR) snapped up Albertsons in a $25 billion deal in October, in a mega merger between the No. 1 and 2 standalone grocers, saying that the deal would help it better compete against U.S. grocery industry leader Walmart (NYSE:WMT) Inc on prices. The planned acquisition has come under sharp criticism on antitrust grounds.

Kroger this month received a request for additional information from the U.S. Federal Trade Commission as part of the regulatory review process for the planned merger.

© Reuters. FILE PHOTO: The Albertsons logo is seen on an Albertsons grocery store, as Kroger agrees to buy rival Albertsons in a deal to combine the two supermarket chains, in Rancho Cucamonga, California, U.S., October 14, 2022. REUTERS/Aude Guerrucci

The Washington Attorney General has said that the dividend payout "risks severely undercutting the grocery giant's ability to compete" during the lengthy regulatory scrutiny.

Albertsons has maintained that it was in a strong position financially and that the dividend would not hurt it.

Latest comments

Another repulsive example of intrusive bureaucracy, aka big government. This is not AG business to decide whether a company can pay dividends to shareholders. Period.
It's not what it sounds like. A too often strategy used in mergers and acquisitions is to drain the acquired company of its assets and sell the remaining debt or file as separate entity from the acquisition company for bankruptcy. In simplest terms, the goal isn't expansion. The effort is to absorb and dismantle competition. In regard to Kroger and Albertsons, this would result in fewer choices for grocery shoppers, reduced competition for value and pricing, and lay-offs affecting local communities. Kroger has been acquiring grocers in my area. They shut down stores and force longer drives to buy groceries at over crowded stores. It's like getting stuck at an airport when flights are cancelled and delayed.
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