Attorneys general sue to stop $4B dividend payment tied to Kroger-Albertsons deal

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Attorneys general sue to stop $4B dividend payment tied to Kroger-Albertsons deal

A federal lawsuit was presented this week by three attorneys general, seeking to prevent Albertsons from paying a $4 billion dividend to Kroger investors, the NY Times reports. The dividend is part of a nearly $25B deal that would combine the two chains with more than 5,000 stores.

The merger has encountered several challenges, as U.S senators Bernie Sanders, independent of Vermont, and Elizabeth Warren, Democrat of Massachusetts, and Representative Jan Schakowsky, Democrat of Illinois, urged the Federal Trade Commission chairwoman, Lina Khan, to oppose the deal.

“You now have a more wobbly Albertsons competing in a marketplace that we know is experiencing staffing shortages, that is also competing for customers. And we think that is enough to establish a violation,” said attorney general of Washington, D.C Karl Racine, who first voiced his concerns about the grocers deal last week.

The federal suit, which remains under seal, argues that the dividend will deprive Albertsons of cash it needs to compete with other grocers. Thus, putting it in violation of the U.S. pillar of antitrust law, the Sherman Act.

Kroger representatives said that the dividend payment is “independent of the merger transaction”, and that the decision was made “solely” by Albertsons.

“Our merger with Albertsons will provide compelling benefits to America’s consumers, Kroger’s and Albertsons’ associates and communities by expanding access to fresh, affordable food and establishing a more competitive alternative to large, nonunion retailers,” a spokeswoman for Kroger said to NY Times.

Together, the two chains have revenue of more than $209 billion.

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