In an filed Wednesday, Oregon Attorney General Ellen Rosenblum calls the payout a 鈥済utting of cash reserves鈥� that will reduce 鈥淎lbertsons鈥� ability to aggressively compete with Kroger鈥� during the several years it would take for the merger to complete.
Albertsons was set to pay a cash dividend of $6.85 per share to stockholders, totaling about $4 billion. A judge last week with a temporary restraining order after Washington Attorney General Bob Ferguson sued the company. The block is in effect until Nov. 17.
Attorneys general in Illinois, California and the District of Columbia have also filed court actions supporting the suit. They and Rosenblum argue the payout would weaken Albertsons鈥� ability to keep up with inventory and staffing, thus driving customers to Kroger stores. The attorneys general also allege it would make Albertsons an easier-to-purchase suitor.
Albertsons has defended the dividend, and insisted it has enough cash to make the payout while still operating its grocery stores.
The companies are significant players in the Northwest grocery market. Kroger owns multiple supermarket chains, including Fred Meyer and QFC, while Albertsons owns the namesake Albertsons stores and Safeway. Together, they make up a large majority of Oregon grocery stores.
Albertsons operates more than 120 stores in Oregon, according to Rosenblum鈥檚 brief, and Kroger owns a total of 55 Fred Meyer and QFC stores. In some Oregon cities 鈥� including The Dalles, Sandy, Tillamook and Florence 鈥� Albertsons and Kroger stores 鈥渁ppear to be the only major grocery retailers and head-to-head competitors,鈥� Rosenblum writes.
The is still under review by federal regulators.
Rosenblum鈥檚 brief cites Albertsons鈥� acquisition of Safeway in 2015 as a harbinger of what鈥檚 to come. After the acquisition, federal regulators required Albertsons to sell stores to another company, with the hope of creating a regional competitor. Albertsons sold 146 stores to Haggen, but shortly after, over anti-competitive practices. Haggen later filed for bankruptcy.
鈥淔ollowing Haggen鈥檚 bankruptcy filing, Albertsons repurchased seven Oregon stores it had divested to operate them under the Albertsons banner, and shuttered stores as well, showing divestitures failed, and competition suffered,鈥� Rosenblum writes.
In a , Kroger says its merger with Albertsons will 鈥渆xpand customer reach and improve proximity to deliver fresh and affordable food to approximately 85 million households with a premier omnichannel experience.鈥�
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