Albertsons' $4B dividend payout put on hold by court
The special cash dividend was part of Kroger's deal to buy Albertsons for $25 billion announced last month
Albertson's $4 billion dividend payment that was due to investors on Monday has been put on hold.
Washington's King County court has granted a nationwide temporary restraining order, according to a Tweet from State Attorney General Bob Ferguson.
"We'll be back in court Nov. 10 seeking an injunction to keep the dividend on hold while our lawsuit continues," Ferguson said in a tweet.
Last month, supermarket operator Kroger announced its intension to buy Albertsons in a $25 billion deal.
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A shopper enters an Albertsons grocery store and its Sav-on pharmacy in Portland, Oregon. (iStock / iStock)
As part of the deal, Albertsons announced a payout of a "special cash dividend" of up to $4 billion to its shareholders, funded by $2.5 billion in cash on hand and borrowing the rest, with a payment date of Nov. 7.
Ferguson filed a lawsuit on Tuesday to block Albertsons from paying dividends to shareholders before closure of its proposed merger with Kroger.
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The attorneys general of Washington D.C., California and Illinois also filed a lawsuit on Wednesday in a federal court seeking to block the dividend payment.
Kroger sign on supermarket. ( Photo by Stephen Zenner/SOPA Images/LightRocket via Getty Images / Getty Images)
They alleged the proposed dividend was in violation of federal and state antitrust laws by rendering Albertsons less able to compete effectively with other supermarkets.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| ACI | ALBERTSONS COMPANIES | 19.54 | +0.16 | +0.83% |
| KR | THE KROGER CO. | 60.58 | +0.47 | +0.79% |
They also raised concerns that it would make the retailer strapped for cash after the payout, adding that it would hamper the company's ability to price competitively and maintain staffing and staff wages and benefits.
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Albertsons provided the following response to FOX Business.
"Albertsons Cos. intends to seek to overturn the restraint as quickly as possible because the temporary order was based on the incorrect assertion that payment of the Special Dividend would impair its ability to compete while its proposed merger (the "Merger") with The Kroger Co. ("Kroger") is under antitrust review. A hearing on the State of Washington’s request for a preliminary injunction is scheduled for November 10, 2022."
Reuters contributed to this report.