Albertsons asked by state AGs to delay distribution of special dividend
State attorneys general want to first review proposed merger with Kroger
Kroger-Albertsons merger good for middle-class living: Flickinger
Strategic Resources Group managing director Burt Flickinger analyzes the merger between supermarket giants Kroger and Albertsons on "The Claman Countdown."
A handful of state attorneys general sent a letter to the CEOs of Albertsons and Kroger grocery store chains Wednesday, asking the former to hold off on distributing a special dividend until they review the proposed merger.
Roughly two weeks ago, Albertsons announced it would pay a $6.85-per-share special dividend to stockholders on Nov. 7. The special dividend payout, connected to the merger with Kroger, amounts to up to roughly $4 billion.
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The attorneys general of D.C., Arizona, California, Idaho, Illinois and Washington state asked the company to "cancel issuance of the special dividend and postpone payment of any such dividend until" the states wrap up their review and the merger closes. Federal and state competition laws "forbid parties from entering agreements that substantially lessen competition or unreasonably restrain trade," they noted in the letter.
Several state attorneys general sent a letter to Albertsons and Kroger, asking the former to hold off on a special dividend until they review the proposed merger. (Stephen Zenner/SOPA Images/LightRocket via Getty Images / Getty Images)
In addition to potential consumer price and employee wage impacts, they expressed concerns about possible "anti-competitive effects" of the combination, particularly that "paying a dividend of this size will hamper its [Albertsons’] ability to meaningfully compete with Kroger" in the meantime. Additionally, they suggested the dividend could make it "significantly more difficult" for Albertsons to compete with other grocery chains if the merger doesn’t end up going through.
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An Albertsons Companies spokesperson told FOX Business that the planned merger "will provide significant benefits to consumers, associates and communities and offers a compelling alternative to larger and non-union competitors."
Several state attorneys general expressed concerns about possible "anti-competitive effects" of the Kroger-Albertsons merger. (Bridget Bennett/Bloomberg via Getty Images / Getty Images)
"The merger announcement and special dividend mark the successful outcome of the strategic review we launched in February, which considered a wide range of options to build on our success and deliver enhanced value for all our stakeholders," the spokesperson continued.
Albertsons "will continue to be well capitalized with a low debt profile and strong free cash flow" after the dividend payment, according to the spokesperson.
Oranges are displayed for sale at an Albertsons grocery store in San Diego on June 22, 2020. (Bing Guan/Bloomberg via Getty Images / Getty Images)
Citing the company’s "financial strength" and "positive business outlook," the spokesperson said Albertsons is "confident that we will maintain our strong financial position as we work toward the closing of the merger."
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The two grocery store chains announced Kroger would buy Albertsons in a deal worth $24.6 billion earlier in the month. The proposed merger, subject to regulatory approval, is expected to close in early 2024.
FOX Business reached out to Kroger for comment as well.