LOS ANGELES — UFCW Locals 5, 7, 324, 367, 770, 3000, and Teamsters 38 applauded the Attorneys General from California, Illinois and Washington D.C. who today asked the United States District Court for the District of Columbia to stop Albertsons from paying its private equity shareholders a $4 billion dividend ahead of the grocery giant’s proposed merger with Kroger. This action followed that of Washington state’s Attorney General who had filed a lawsuit yesterday in King County Superior Court.
The court filing details the unusual structuring of the merger designed to take Albertson’s from a cash-flush company to a “failing” company by paying out nearly all the company’s cash – and saddling the company with $1.5 billion in new debt in order to pay out a so-called “Special Dividend.” The Attorneys General went even further to argue that the deal doesn’t pass the anti-competitive smell test. Albertsons’ ability to operate its stores and compete meaningfully with Kroger will be compromised even while the merger is scrutinized by federal regulators. “Even a short-term reduction in competition in urban neighborhoods…can result in higher prices and reductions in quality that can significantly harm consumers’ pocketbooks and their health,” the Attorneys General argue.
Attorneys General from these states and Arizona and Idaho sent a letter last week to the CEOs of Albertsons and Kroger raising serious concerns over the proposed $4 billion payout and gave Oct. 28, 2022 as a deadline to address the concerns and stop the dividend payment. The timing of the legal actions was necessary because Albertsons and Kroger had announced, as part of their proposed deal, that the $4 billion payout by Albertsons would take place next week on Nov.7.