Washington court keeps Albertsons’ $4 billion payment on ice

Albertsons’ $4 billion shareholder payout remains pending. / Photo: Shutterstock

Albertson Payment of $4 billion in dividends to shareholderswhich was to be disbursed on Monday, remains pending following a King County Superior Court commissioner’s decision Thursday evening.

Commissioner Henry Judson granted the temporary restraining order filed by Washington State, blocking the payment, at least until a new hearing is held next Wednesday and Thursday.

The decision comes less than a month after Kroger announced its intention to merge with Albertsons in a $24.6 billion deal that would create a grocery giant, a deal that is still subject to government scrutiny.

Attorneys general and others across the country have expressed concern that paying the special dividend would leave Albertsons in a weakened financial position, unable to compete with Kroger, making the merger particularly risky.

Thursday’s ruling contradicts a ruling by a U.S. federal court in Washington, D.C. on Tuesday, in which a judge overturned a restraining order filed by the attorneys general of California, Illinois and Washington, D.C. who sought to suspend payment.

On Thursday, Oregon Attorney General Ellen Rosenblum added her voice to the suit Washington state filed earlier this month with an amicus brief that noted that consumers in her state would be harmed if Albertsons proceeds. to pay $4 billion before the merger could be investigated.

“Albertsons operates more than 121 stores in Oregon,” the brief states. “Kroger has 51 Fred Meyer stores and 4 QFC stores in Oregon. Businesses compete with each other throughout Oregon. Among Fred Meyer stores, 41 stores operate in the same city as an Albertsons store. In certain Oregon cities such as The Dalles, Sandy, Tillamook and Florence, the defendants appear to be the only major grocery retailers and direct competitors. Common ownership would remove the direct competition these defendants currently face.

Albertsons, in a statement late Thursday, maintained its position on the lawsuits.

Albertsons Cos. continues to believe that the claim brought by the State of Washington is without merit and provides no legal basis to rescind or defer a dividend that has been duly and unanimously approved by Albertsons Cos. board fully informed,” the company said.

Read more: 7 things to know about the Kroger-Albertsons merger

A merger of Kroger and Albertsons would create a grocery giant with nearly 5,000 stores and more than 700,000 employees. Albertsons alone operates more than 2,200 stores in 34 states, under banners such as Albertsons, Safeway, Vons, Jewel-Osco, Acme, Tom Thumb and more.

Cincinnati-based Kroger is the nation’s second-largest grocer, by market share, behind Walmart. And Boise-based Albertsons ranks fourth, behind Costco. Combined, the new company would come close to competing with retail giant Walmart.

Anticipating antitrust scrutiny, the companies said they were ready to create a subsidiary called SpinCo that would operate as a stand-alone public company with between 100 and 375 stores that had been divested in areas of overlapping retail operations. .

The United Food and Commercial Workers International Union (UFCW) has 35,000 members, with about 20,000 working in Albertsons or Kroger stores, Jonathan Williams, the union’s communications director, told WGB.

UFCW is deeply concerned about what would happen to the Albertsons if the $4 billion dividend is paid, Williams said.

“This payment represents more than the last 10 years of Albertsons profits combined,” Williams said. “It seems like a deliberate ploy to game the system… If he has no cash, when we go to negotiate our next union contract in the spring… the company won’t have any cash. How will they fund the salary increases? How are they going to fix a whole thing in the roof if there’s no money on hand? »

A dire financial situation for Albertsons could lead to store closures and lower union density, which could put “downward pressure on wages and employment standards,” he said.

A Senate panel is due to discuss the proposed merger later this month. Senators Amy Klobuchar (D-Minn.) and Mike Lee (R-Utah) previously said they had “serious concerns” on the ramifications of the transaction.