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Washington AG seeks to block Albertsons’ payout to shareholders ahead of merger

SEATTLE — State Attorney General Bob Ferguson is leading a new effort to block Albertsons from paying out billions to investors as it prepares for a merger with Kroger.

The state is suing Albertsons to block a $4-billion payout to shareholders, called a dividend payment, ahead of the merger.

Ferguson says he is trying to stop Albertsons from paying that out because the payout would hinder Albertsons’ ability to compete in the market.

This would hurt shoppers, as less competition means less incentive to put forth competitive prices, according to Ferguson.

“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,” Ferguson said. “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.”

According to Securities and Exchange Commission filings, this dividend exceeds Albertsons’ cash on hand.

The company would need to empty out its cash reserves and take on more than $1.5 billion in debt to pay the dividend, which it plans to do next Monday.

This could limit Albertsons’ ability to keep up with inventory orders, forcing customers to go to other grocery stores.

Ferguson is asking for a temporary restraining order to block the payment.

The unions representing grocery workers also oppose the payout and the merger itself since it could lead to job cuts.

There’s also concern over store closures in Washington since Albertsons owns Safeway, and Kroger owns QFC and Fred Meyer.

Senators Maria Cantwell and Patty Murray also expressed concern about the merger in a letter sent to the Federal Trade Commission on Monday.

“The merger poses a specific and disproportionate threat to Washington consumers, workers, and our underserved communities,” the letter reads. “Together, the 337 Albertsons and Kroger grocery stores in Washington represent 21.5 percent of the state’s total. … Given their aggregate share of the state’s retail grocery sector, we fear that Washington is at disproportionate risk of losing stores as a result of the proposed merger.”