King County judge temporarily halts Albertsons merger payout
A King County Court Commissioner has approved a temporary restraining order request filed by Washington state Attorney General Bob Ferguson to block Albertsons Inc. from paying a massive dividend to investors Monday, Nov. 7.
If the dividend were to go through on that date, it would come before federal and state regulators review the company’s proposed merger with Kroger Inc. The two grocery giants agreed to merge over a $20 billion deal — which would allow grocery store Kroger to acquire Albertsons and allow Albertsons to pay out shareholders $4 billion in dividends.
Ferguson and six other Attorneys General around the country have expressed concern paying billions in dividends would make Albertsons financially unable to operate during the merger review period effectively. And they worry that could cause problems for employees and consumers.
“[Albertsons and Kroger] control hundreds of grocery stores,” Ferguson said. “In my part of North Seattle, I’ve got two grocery stores, almost within walking distance of each other. They are owned by each of these two competitors. And if those competitors are no longer competing, guess what’s going to happen, prices are going to go up, and workers will have fewer opportunities.”
The Food at Home Index, an approximate evaluation of grocery store costs, reported an increase in food prices by 0.7% in September and a stunning 13% over the last year, according to the Consumer Price Index.
According to the Census Bureau’s Household Pulse Survey done in January, as many as 42 million Americans said they could not afford to buy enough food.
Kroger currently owns Fred Meyer and QFC stores. Albertsons owns Safeway and Haggen.
The next step for the Attorney General is to go before a King County Superior Court Judge to issue a preliminary court injunction. That action would completely stop any dividend payout until the judge can rule on the underlying complaint filed about the merger.
“It’s a huge victory; there’s no other way to put it,” said Ferguson. “It puts a stop to this $4 billion payment that had the potential to have huge implications for Americans when they go grocery shopping and for workers who work in those stores.”
The state legal team will next face the judge on Thursday, Nov.10.