California, others ask court docket to quickly cease $4 billion Albertsons dividend fee By Reuters

© Reuters. FILE PHOTO: The Albertsons emblem is seen on an Albertsons grocery retailer, as Kroger agrees to purchase rival Albertsons in a deal to mix the 2 grocery store chains, in Rancho Cucamonga, California, U.S., October 14, 2022. REUTERS/Aude Guerrucci

By Diane Bartz

WASHINGTON (Reuters) – The attorneys basic of California, Illinois and Washington D.C. requested a federal court docket on Thursday for a preliminary injunction that might forestall Albertsons Firms Inc, which is being bought by rival Kroger (NYSE:) Co, from paying a $4 billion dividend to shareholders.

The state officers stated in a court docket submitting that Kroger, which doesn’t but personal its rival, agreed with Albertsons that Albertsons would pay the dividend at the start of the merger evaluate.

“Fee of the particular dividend, at the side of the restrictions defendants’ merger settlement imposes on Albertsons’ potential to borrow cash, probably will hamper Albertsons’ potential to compete with Kroger and different grocers, leaving customers going through increased costs, worse service, much less innovation, closure of their native Safeway or different Albertsons grocery store, or the entire above,” they stated within the submitting.

California Legal professional Common Rob Bonta stated in a press release that he was decided to cease the $4 billion handout. “We’re not going to cease preventing to guarantee that the proposed merger would not hurt California households, staff, and farmers,” he stated.

Albertsons didn’t instantly reply to a request for remark. The corporate has stated that it was in a powerful place financially and that the dividend won’t harm it.

The lawsuit was filed in federal court docket in Washington, D.C.

Albertsons had been initially scheduled to pay the particular dividend on Nov. 7.

A court docket on the opposite aspect of the nation, in Washington state, has put a short lived restraining order on the fee and stated it might proceed to stay on maintain till a listening to scheduled for Dec. 9.

Kroger snapped up Albertsons in a $25 billion deal in final month’s mega merger between the No. 1 and a couple of standalone grocers, saying that the deal would assist it higher compete towards U.S. grocery business chief Walmart (NYSE:) Inc on costs. The deliberate acquisition has come below sharp criticism on antitrust grounds.