SEATTLE — A Washington state judge has temporarily blocked Albertsons from paying a $4 billion dividend to investors as part of the grocer’s proposed merger with rival Kroger.
On Thursday, King County Superior Court Commissioner Henry Judson approved a motion by state Attorney General Bob Ferguson to temporarily freeze the dividend until the court can further consider whether payment violates antitrust laws, The Seattle Times reported.
The dividend was to be paid on Monday.
The proposed merger would combine two of the nation’s largest grocery chains. Some critics fear this will mean reduced competition, higher food prices and the closure of underperforming venues, including some in Washington state. Albertson ACI,
which owns Safeway, and Kroger, which owns QFC and Fred Meyer, are among the biggest players in Washington.
“Stepping this $4 billion payout is a huge win for consumers nationwide,” Ferguson tweeted Thursday afternoon.
Next Thursday, King County Superior Court Judge Ken Schubert is due to take a closer look at the arguments in the case.
“There’s obviously other information and evidence that needs to come forward,” Judson noted.
In a lawsuit filed Tuesday, Ferguson argues the dividend is illegal because it potentially impairs Albertsons’ ability to keep all of its locations open for the several years needed to complete the merger.
These arguments were taken up by attorneys general of Illinois, California and the District of Columbia, who jointly sued Wednesday to block the dividend in federal court in Washington, D.C.
Albertsons, based in Boise, Idaho, said this week that both lawsuits were without merit.
A major dividend concern is the potential impact of such a large payout on Albertsons. To obtain regulatory approval for the merger, Albertsons and Kroger KR,
have to sell hundreds of locations in areas where they have too much market overlap. The so-called divestiture could have a major impact in Seattle and throughout Washington, where Kroger and Albertsons collectively have about 350 locations.
Kroger and Albertsons agreed to place the divested sites in a standalone company, managed by Albertsons, and then sell them to one or more competing retailers as part of the approval process.
However, some antitrust and trade experts wonder whether the locations chosen for the divestment might already be in financial trouble. They fear that a cash-strapped Albertsons will fail to keep all of those locations open while it finds a willing buyer and that some divested stores could close, as happened after the 2015 merger between Albertsons and Safeway.