Other LanguagesOLYMPIA — Attorney General Bob Ferguson today issued the following statement after the Washington State Supreme Court declined to review a request to block Albertsons’ $4 billion dividend payment. An order temporarily blocking this payout will expire today as a result of the court’s order.
“The issues raised in our legal challenge are important to grocery workers and hardworking Washingtonians who must access affordable groceries to feed themselves and their families,” Ferguson said. “We respect the decision of the Court, but we are surprised and disappointed the Supreme Court decided not to hear this case. That said, I want to be clear: This merger is far from a done deal. My team and I will be conducting a thorough review.”
Case background
Ferguson filed a lawsuit on Nov. 1 to block Albertson Companies Inc. from enriching its shareholders with a $4 billion payout before a proposed merger with The Kroger Co. can be reviewed by state and federal antitrust enforcers. The “special dividend” payment, Ferguson argues, risks severely undercutting the grocery giant’s ability to compete during the lengthy time period government regulators — including Washington — will be scrutinizing the merger.
According to Securities & Exchange Commission filings, this $4 billion dividend exceeds Albertsons’ cash on hand. Albertsons revealed in a recent filing that it will pay for the dividend with $2.5 billion in cash on hand and borrow the rest. Albertsons planned to pay out the dividends on Nov. 7.
The court granted Ferguson’s motion for temporary restraining order on Nov. 3. King County Superior Court Judge declined the state’s motion for a preliminary injunction, which would have blocked the dividend for the duration of the case, but extended the temporary restraining order while the Washington State Supreme Court considered Ferguson’s request to review the case. That temporary restraining order will expire now that the request has been declined.
The two grocery giants own other companies with stores in Washington. Albertsons owns Safeway and Haggen, while Kroger owns QFC and Fred Meyer. Albertsons and Kroger account for the vast majority of grocery stores in Washington, with 216 Safeway and Albertsons stores in the state and 114 Kroger-owned Fred Meyer and QFC stores.
After the merger announcement, The Seattle Times, citing numbers from Nielsen, reported that more than half of households in the Seattle metro area alone most frequently shop at a store owned by one of the companies.
Nationwide, Kroger and Albertsons have nearly 800,000 employees in nearly 5,000 stores across 48 states and the District of Columbia.
On Oct. 26, Ferguson partnered with a bipartisan group of six attorneys general from around the country to urge Albertsons to delay paying the special dividends until the states complete their review of the proposed merger. In the letter, the attorney generals cite that the $4 billion payout represents about a third of Albertsons’ total stock value. In its response, Albertsons declined to delay paying the special dividend. The lawsuit accuses Kroger and Albertsons of violating state antitrust laws and the Consumer Protection Act. Due to severely reducing its cash on hand, the payout could diminish Albertsons’ ability to keep up on inventory orders, forcing customers to go to other grocery stores when shelves are not stocked with the products they seek. Less inventory to stock could also impact employee hours.
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