Washington state sues to block Albertsons’ $4 billion payout to shareholders

(Reuters) – Washington state Attorney General Bob Ferguson filed a lawsuit on Tuesday to stop grocery chain Albertsons Cos Inc from paying dividends to shareholders before the close of its proposed merger with the United States. supermarket operator Kroger Co.

The $4 billion payout to shareholders “risks significantly reducing the grocery giant’s ability to compete for the lengthy period that government regulators — including Washington — will be reviewing the merger,” according to a statement on the site. Washington Attorney General’s Web.

Kroger had bought Albertsons in a $25 billion deal last month, creating an American grocery giant to better compete with leader Walmart Inc on price, but it was expected to faces antitrust hurdles.

The attorney general will file a temporary restraining order on Tuesday or Wednesday, which, if granted, will stop Albertsons from making the payment while Ferguson’s trial is ongoing.

“Dispensing $4 billion before regulators can do their job and review the proposed merger will weaken Albertsons’ ability to continue as a business and be competitive,” Ferguson added.

Albertsons responded to the lawsuit by calling it “baseless” and without “legal basis”.

“The special dividend is the means by which we independently execute our long-standing capital return strategy,” Albertsons’ spokesman said in a statement emailed to Reuters. “He will be paid regardless of the completion of the merger.”

Kroger did not immediately respond to a request for comment on the AG lawsuit.

In late October, District of Columbia Attorney General Karl Racine said half a dozen state attorneys general were looking into Kroger’s planned acquisition of Albertsons.

(Reporting by Juby Babu and Kanjyik Ghosh in Bengaluru; Additional reporting by Ann Maria Shibu; Editing by Sherry Jacob-Phillips)

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