AG: Grocers ‘cannot sabotage their ability to compete,’ halting payout
Nov 2, 2022, 7:13 AM | Updated: 9:05 am
The Albertsons logo is displayed in front of an Albertsons grocery store on October 14, 2022 in Los Angeles, California. Top grocery retailer Kroger has agreed to acquire rival Albertsons for $24.6 billion. (Photo by Mario Tama/Getty Images)
(Photo by Mario Tama/Getty Images)
Shareholders of Albertson Companies Inc. may not receive a $4 billion payout next week if a lawsuit filed by Washington state’s Attorney General to block the merger between Albertsons and Kroger goes through.
Tuesday, AG Bob Ferguson filed the suit in King County Superior Court, with plans to also file a temporary restraining order to stop Albertsons from paying the stock dividend while the lawsuit is underway.
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Albertsons owns Safeway and Haggen grocery stores. It plans to merge with Kroger, which owns QFC and Fred Meyer stores in western Washington. A news release from the Attorney General’s office says Albertsons and Kroger account for the vast majority of grocery stores in Washington, with 216 Safeway and Albertsons stores in the state and 114 Kroger-owned Fred Meyer and QFC stores.
“Paying out $4 billion before regulators can do their job and review the proposed merger will weaken Albertsons’ ability to continue business operations and compete,” Ferguson said. “Free enterprise is built on companies competing, and that competition benefits consumers. Corporations proposing a merger cannot sabotage their ability to compete while that merger is under review.”
Due to severely reducing its cash on hand, the payout could diminish Albertsons’ ability to keep up with inventory orders, forcing customers to go to other grocery stores when shelves are not stocked with the products they seek.
Ferguson has already signed a letter along with five other attorneys general from around the country, urging Albertsons to delay paying the special dividend until the states have finished reviewing the proposed merger. But Albertsons responded by refusing their request.
Some retail analysts are concerned if the merger makes it through the review process, there will be many stores previously owned by one of the two corporations in western Washington forced to close. That could limit grocery availability for local residents, cost some employees their jobs and reduce the incentive to offer competitive prices to consumers.
Albertsons plans to pay out the dividends on Nov. 7.
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