Now that Albertsons has paid out the special dividend of nearly $4 billion to its shareholders, many of those who opposed the payment are poised to continue to voice their objecting to the company’s pending merger with Kroger Co. as well.
Washington state Attorney General Bob Ferguson, who last week failed to win an appeal to the state Supreme Court in his effort to block the dividend payment, said his office will continue to review the merger and its potential impact on residents of the state.
“The issues raised in our legal challenge are important to grocery workers and hardworking Washingtonians who must access affordable groceries to feed themselves and their families,” Ferguson said in a statement. “This merger is far from a done deal. My team and I will be conducting a thorough review.”
Ferguson had sued to block Albertsons from paying the special dividend, arguing that that it will impede Albertsons’ ability to compete during what is expected to be an extensive antitrust review by federal regulators. He also said it would violate antitrust law and the Consumer Protection Act.
Kroger and Albertsons have extensive store overlap in Washington and other markets and are expected to spin off hundreds of stores to satisfy antitrust concerns.
Albertsons announced the dividend payment at the same time it announced the merger but said the two events were not connected. The dividend payout of $6.85 per share reduced the value of the Kroger merger by about $4 billion. Albertsons said it will fund the dividend with $2.5 billion of its $3 billion cash on hand, plus $1.5 billion funded by its line of credit.
Colorado Attorney General Phil Weiser, who filed an amicus brief in support of Washington State in its suit to block the dividend, has also been leading a multistate investigation into the merger, which is scheduled to be completed in 2024.
“I am disappointed that the Albertsons special dividend was allowed to proceed because it risks weakening the company’s ability to compete during and after the review of the merger by federal and state regulators, including the Colorado Attorney General’s Office,” Weiser said in a statement provided to SN. “My antitrust team and I will continue with a rigorous review of the merger and its potential harm to consumer food prices, workers, and farmers and other local suppliers. And I look forward to hearing Coloradans’ concerns about the merger as we embark on a series of community forums across the state.”
“The fact remains that this proposed merger is still under review,” the press office of California Attorney General Rob Bonta said in a statement. “Our office is dedicated to doing all we can to ensure that the proposed merger of these grocery behemoths complies with antitrust law and does not result in higher prices and worse service for consumers, suppressed wages for workers, or other anticompetitive effects.”
Before filing the suit, Ferguson joined with the attorneys general of Arizona, Idaho, California, Illinois and Washington, D.C., to send a letter to Kroger and Albertsons asking them to delay the dividend payment until the states had an opportunity to review the merger.
A separate, federal lawsuit filed in U.S. District Court in Washington, D.C., by the attorneys general of California, Illinois and Washington, D.C., also sought to block the dividend payment, the court in December declined to issue a restraining order against the dividend.
In addition to the ongoing investigation by Washington state, a collation of United Food and Commercial Workers union locals in 12 states also issued a statement outlining its opposition to the merger.
“We are disappointed to see a ruling that favors a small number of ultra-wealthy shareholders over the many thousands of essential workers and millions of Americans who will be left to suffer the consequences of the outright financial looting of Albertsons,” the union locals said in the statement following the Washington state Supreme Court ruling, which its described as a “setback.”
The union collation said the suit that delayed the dividend payment helped build public awreness about the potential negative consequences of the merger.
“Our unions will not stop working to protect our members and our communities from the harmful impacts of this proposed mega-merger of Kroger and Albertsons,” the union coalition said. “It is now even more important that the Federal Trade Commission take swift and decisive action to block the acquisition.”
A spokesperson for the UFCW could not be reached for further comment.
Several states that had opposed the dividend payment also could not be reached for comment.
