DEE-ANN DURBIN, AP Business Writer
A bipartisan group of attorneys general is asking the Albertsons to defer a $4 billion payment to shareholders until Kroger completes a review of its proposed takeover of the grocery chain.
Kroger announced earlier this month that it would pay $20 billion to acquire Albertsons. The deal is expected to close in early 2024, subject to approval by the Federal Trade Commission and the Department of Justice and surviving court challenges.
The merger agreement included a special dividend of up to $4 billion ($6.85 per share) that Albertsons would pay shareholders on November 7.
In an open letter sent to the Albertsons this week, the six Attorney Generals said the dividend, equivalent to almost one-third of the Albertsons’ $11 billion market value, would be distributed while regulators consider the merger. He said it would take away the cash the company needs to operate.
The letter also said it was unclear whether the deal would be approved because federal and state laws prohibit mergers that significantly reduce competition. will control about 13% of the grocery market.
“If the regulatory challenge to the merger is successful, or if both parties abandon the deal, Albertsons will have to continue to compete with other grocery stores. will significantly exceed that target, which will be difficult to achieve,” the letter said.
The letter was signed by the Democratic Attorneys General of the District of Columbia, California, Illinois, and Washington, and the Republican Attorneys General of Arizona and Idaho. Albertsons is based in Boise, Idaho.
In a statement, Albertsons said the merger announcement and special dividend mark the successful completion of a strategic review of the company’s future that began in February. As of the end of September, the company had approximately $29 billion in assets, including his $3.4 billion in cash and cash equivalents.
“We are confident that we will remain in a strong financial position as we work to complete the merger,” said Albertsons.
The attorney general asked the Albertsons to respond to the letter by Friday. A spokesperson for District of Columbia Attorney General Karl Racine declined to say Thursday whether the Albertsons had responded.
However, Racine said the Attorney General will consider a lawsuit to stop the payment of the dividend if the Albertsons do not agree to the delay. The Attorney General said in 2019 he could sue, either alone or in concert with the Justice Department, to block the merger, as he did when T-Mobile acquired smaller rival Sprint. can also do.
Private equity firm Cerberus Capital Management may stand to gain the most from the Albertsons dividend payment. Cerberus led the investor consortium that acquired Albertsons in 2006. This helped Albertsons finance his 2015 purchase of the Safeway chain, bringing his Albertsons public in 2020. Cerberus owns approximately 30% of Albertsons shares.
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