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AGs in several states sue Albertsons to block its $4B shareholder payout

One day after Washington’s attorney general sued the grocer, more states have joined in taking legal action against the retailer, saying the payout would leave it unable to compete with Kroger. The two grocers announced merger plans last month.

Heather Lalley, Managing editor

November 2, 2022

2 Min Read
Albertsons
Photo: Shutterstock

One day after Washington’s attorney general filed a lawsuit to block Albertsons from giving a $4 billion payout to its shareholders, three more states have filed suit.

The attorneys general of Washington, D.C., California and Illinois on Wednesday filed a lawsuit in the U.S. District Court for the District of Columbia, seeking to bar Albertsons from paying out its “special dividend” on Monday.

Last week, attorneys general from five states and Washington, D.C. called for a formal investigation into the proposed $24.6 billion merger between Kroger and Albertsons, while also demanding Albertsons put the brakes on its shareholder payout because to do so could limit Albertsons’ ability to operate and compete against Kroger.

“Albertsons’ rush to secure a record-setting payday for its investors threatens District residents’ jobs and access to affordable food and groceries in neighborhoods where no alternatives exist,” D.C. Attorney General Karl Racine said in a statement Wednesday. “This would have a particularly devastating impact on struggling people and families with access to fewer grocery stores during a time of historically high inflation.”

On Tuesday, Washington Attorney General Bob Ferguson filed a similar lawsuit, seeking to block the payout from going forward.

Boise-based Albertsons, in a statement to WGB, called Ferguson’s suit “meritless” and without a legal basis to postpone or block the shareholder payout.

"The allegation that this dividend will somehow hinder our ability to compete in the marketplace is also meritless,” the Albertsons Cos. Spokesperson said. “Given our financial strength and positive business outlook, we are confident that we will maintain our strong financial position as we work toward the closing of the merger. Additionally, payment of the special dividend will not hinder Albertsons Cos.’ ability to continue investing in our stores and technology to provide an even better shopping experience while we continue to operate as an independent company, and it will not impact the agreements that we have made with unions representing our associates to increase wages and benefits.”

Kroger and Albertsons announced merger plans last month, as well as Albertsons’ plans for the $4 billion “special dividend” payout to go out to shareholders on Monday.

If the merger goes through, it would create a grocery giant well-positioned to compete with Walmart, with nearly 5,000 stores, 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies, more than 2,000 fuel centers and 710,000 workers.

Washington D.C. labor union UFCW Local 400, which represents Safeway workers, applauded Racine’s lawsuit.

“If allowed to occur, this payout will leave Albertsons largely depleted of liquid assets and put the livelihoods of countless grocery workers in jeopardy,” UCFW Local 400 President Mark Federici said in a statement

Read more about:

Albertsons Cos.Kroger

About the Author

Heather Lalley

Managing editor

Heather Lalley is the managing editor of Restaurant Business, Foodservice Director and CSP Daily news. She previously served as editor in chief of Winsight Grocery Business.

Before joining Winsight and Informa, Heather spent nearly a decade as a reporter for the daily newspaper in Spokane, Washington. She is the author of "The Chicago Homegrown Cookbook." She holds a journalism degree from Northwestern University and is a graduate of the two-year baking and pastry program at Washburne Culinary Institute in Chicago.

She is the mother of two and rarely passes up a chance to eat tater tots.

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