Albertsons Dividend Payment Restrained Amid State AGs Litigation
Albertsons is working to overturn a temporary restraining order (TRO) “as quickly as possible,” in order to unshackle its ability to divvy up $4 million in special cash dividend payments to shareholders, previously set to be paid on Monday, November 7.
The retailer issued its response today after noting that Bob Ferguson, Washington state attorney general, has been granted a TRO in addition to filing a lawsuit against the retailer on Wednesday to block the payment. State attorneys generals from the District of Columbia, California and Illinois, who were part of a cohort that requested last week the retailer delay the payment until after the antitrust review process has concluded, also fired back with similar suits this week when Albertsons rejected the appeal.
Albertsons claimed in a response letter to the state AGs that postponing the payment would create “significant” legal and financial liabilities. Additionally, the retailer claimed the dividend payment was decided on prior to negotiations with Kroger about a potential acquisition, despite both retailers previously claiming it was a part of the deal in the original, October 14 announcement.
The TRO was granted by a commissioner assistant to the judge assigned to the case in Washington. A hearing on the order is scheduled for Thursday, November 10; however, depending on the response from Albertsons’ legal team, it is possible that the order could be extended or dismissed ahead of the hearing, according to a press release.
Albertsons maintains that the lawsuits are meritless and contain no legal reasoning for delaying the dividend, which it notes had been “unanimously approved by Albertsons [Company’s] fully informed Board of Directors.” The state litigation teams involved in the dispute cite the potential that the deal could be struck down by regulators, and even if it is approved, violate antitrust laws as the size of the payment will harm Albertsons ability to compete in the market during the review process.
The news also comes on the heels of significant movement in antitrust litigation this week. A federal judge sided with the Justice Department in blocking a similar deal in the publishing industry which would have seen Penguin Random House acquire Simon & Schuster, in a $2.2 billion deal which would join two of the world’s leading publishing houses, according to NPR.
The deal raised concerns similar to those who are challenging the Kroger/Albertsons merger including reduced marketplace competition and decreased compensation for workers in the respective industry that if passed, would have effectively “impoverished our democracy,” according to the ruling judge. The ruling was said to be a victory for the Biden Administration’s “tougher” policy on mergers and broke “decades” of bipartisan antitrust litigation precedents.
