Albertsons’ $4B special dividend held up through early February

The temporary restraining order halting Albertsons Cos.’ $4 billion special dividend payment will be in effect more than a month into the new year.

Boise, Idaho-based Albertsons said the next scheduled court hearing for the planned payment, announced along with the company’s $24.6 billion merger deal with The Kroger Co., will be Feb. 9, when the Washington Supreme Court will review an appeal made by the Washington State Attorney General’s office to block the special dividend. The TRO remains pending a further order from the state’s high court.

The Washington Supreme Court had ordered on Dec. 16 that the dividend payment to Albertsons shareholders, originally slated to be made Nov. 7, remain frozen pending further review. In a Dec. 9 hearing, the King County Superior Court rejected the state’s request for a preliminary injunction against the payment but extended the TRO to Dec. 19. The state filed an emergency motion with the state supreme court later on Dec. 9, and the court upheld the request to continue the TRO.

In its order last Friday, the Washington Supreme Court determined that the TRO extension was necessary so the court can fully consider if an appeal is warranted.

Albertsons noted that it has filed a motion to expedite the high court’s Feb. 9 review. The grocer also reported that, on Dec. 20, the U.S. Circuit Court for the District of Columbia denied a motion by the attorneys general of California, Illinois and the District of Columbia for an injunction pending appeal and an administrative stay of the dividend payment.

Under the merger deal unveiled on Oct. 14, Cincinnati-based Kroger plans to acquire all outstanding shares of Albertsons’ common and preferred stock for about $34.10 per share. The total value of the transaction includes the assumption of roughly $4.7 billion of Albertsons’ net debt. The merger announcement also disclosed that Albertsons planned to pay a special cash dividend of up to $4 billion, or about $6.85 per share, to its shareholders on Nov. 7.

Albertsons’ special dividend payment has been suspended under a TRO attained Nov. 3 by Washington AG Bob Ferguson. The state argues that the $4 billion payment, if made, would hamper Albertsons’ ability to operate and compete and might impact consumers and workers. The AG’s office also contends that the payment, as planned, is anticompetitive because it’s tied to a merger deal. Albertsons and Kroger, though, have said the dividend is separate from the merger transaction.

“Albertsons Cos. continues to maintain that the claim brought by the attorney general of the state of Washington, and the similar lawsuit brought by the attorneys general of California, Illinois and the District of Columbia, are meritless and provide no legal basis for preventing the payment of the special dividend,” Albertsons said in a statement on Wednesday. “Albertsons’ position has been supported by favorable rulings in both Circuit and District courts in the District of Columbia and a Washington State court.”