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Washington puts indefinite hold on Albertsons’ $4-billion dividend as FTC begins asking questions

Acquiring Albertsons
BoiseDev complete coverage

Acquiring Albertsons
BoiseDev complete coverage

Albertsons Companies, in connection with its merger with Kroger, hoped to hand out a $4 billion dividend payment to shareholders last month. But it won’t be happening soon.

The Washington State Superior Court decided to extend a temporary restraining order against the payment indefinitely. That extends an earlier order from a lower court that started in November and saw several delays. Last week, Albertsons won in a lower court, but the judge said the hold on the payment should stay in place so the Washington Attorney General could appeal.

That appeal went to the state’s top court, and later Friday, it decided to continue to the restraining order with no definitive end date. It instead said it must remain in place until further direction is provided.

When Kroger said it would try to acquire Albertsons earlier this fall, it said the dividend payment was in connection with the merger, as did Albertsons in its initial press releases. The companies later backtracked after two sets of lawsuits from two groups of attorneys general called it into question.

Washington AG Bob Ferguson said the dividend payment would hobble Albertsons’ ability to compete and weaken the company if the merger doesn’t go through.

Albertsons says the cases are without merit.

“Albertsons Cos. continues to believe that the claim brought by the Attorney General of the State of Washington, and the similar lawsuit brought by the Attorneys General of California, Illinois, and the District of Columbia, are meritless and provide no legal basis for preventing the payment of a dividend that has been duly and unanimously approved by Albertsons Cos.’ fully informed Board of Directors,” the company said in a late Friday news release.

Cincinnati-based Kroger announced in October it hoped to purchase Albertsons in a $24.6 billion acquisition that could close in 2024. The deal brought quick blowback, including the two states’ AG lawsuits, a bipartisan grilling by congress, and complaints from unions. The agreement came after another company initially said it would pay more for Albertsons but changed its mind and backed out.

The company will need sign-off from the Federal Trade Commission, which has taken an increasingly aggressive posture towards larger mergers. The FTC is already probing the proposed $24.6 billion takeover and made two separate requests for information from both Kroger and Albertsons this month, according to industry publication Grocery Dive.

Last week, the FTC announced it would sue to stop Microsoft’s proposed acquisition of game maker Activision-Blizard. A deal for Penguin Random House to buy Simon & Schuster from Paramount Global fell apart after government scrutiny last month.

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Don Day - BoiseDev Editor & Founder
Don Day - BoiseDev Editor & Founder
Don is the founder and publisher of BoiseDev. He is a National Edward R. Murrow Award winner and a Stanford University John S. Knight Fellow. Contact him at [email protected].

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