King County court blocks $4B payout in planned Albertsons, Kroger merger

The King County Superior Court has blocked Albertsons' $4 billion shareholder payout as part of their planned merger with Kroger.

Washington Attorney General Bob Ferguson filed a lawsuit Tuesday to block the "special dividend," which he argued exceeds Albertsons cash on hand. Ferguson said Securities & Exchanges Commission data shows Albertsons only has $2.5 billion on hand, and would borrow money to provide the full payout.

Ferguson argued this would undercut Albertsons' ability to compete while government regulators scrutinize the merger.

The court granted a temporary nationwide restraining order on Thursday.

Ferguson and a bipartisan group of attorneys general previously urged the grocery giant to delay the payout to shareholders until they finished an antitrust review, but the company declined.

"Paying out $4 billion before regulators can do their job and review the proposed merger will weaken Albertsons’ ability to continue business operations and compete," said Ferguson when he filed the lawsuit earlier this week. "Free enterprise is built on companies competing, and that competition benefits consumers. Corporations proposing a merger cannot sabotage their ability to compete while that merger is under review."

The $4 billion payout makes up roughly a third of Albertsons' stock value—prompting concern from local leaders of potential store closures, mass layoffs, and even "food deserts" around the state. Sen. Maria Cantwell and Patty Murray, D-WA, say there is precedent for their concerns, citing the 2015 Albertsons-Safeway merger, which led to closures, layoffs, and the sale of stores to another company which went bankrupt.

Washington leaders slam proposed Albertsons, Kroger merger

Washington leaders are concerned by the proposed Albertsons-Kroger merger, saying it violates antitrust laws and could spell doom for shoppers and workers across the state.

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Albertsons then reacquired some of the stores they sold, which the senators say undercuts the objective of competition entirely.

Albertsons and Kroger account for the majority of grocery stores in Washington, according to the AGO, including Safeway, Haggen, QFC and Fred Meyer stores.