The dividend “could be a massive improper giveaway to certain shareholders,” Racine said Wednesday on CNBC’s Squawk Box, in announcing that the AGs had asked Albertsons to pause the payout. With less cash available, the grocery chain would face difficulty competing in what is already a “very, very tough marketplace” should Kroger’s planned takeover of Albertsons be blocked, he said.
Albertsons announced the dividend after agreeing to merge with Kroger in a deal valued at $24.6 billion. Racine said he was concerned about the merger hurting competition and raising prices. If Albertsons doesn’t halt the dividend payment voluntarily, the AG’s office could seek an injunction in court, Racine said.
On Wednesday, Racine and attorneys general from Arizona, California, Idaho, Illinois and Washington state sent a letter with their request to the chief executives of Albertsons and Kroger. They said the merger has the potential to impact consumers already hurting from inflation, as well as the wages of hundreds of thousands of employees.Colorado Attorney General Phil Weiser said he shares the concerns about Albertsons’ planned $4 billion dividend payment in light of the proposed merger.
Weiser has said his department is monitoring the possible merger of Albertsons, which operates Safeway stores, and Kroger, the parent company of the King Soopers and City Market stores in Colorado. He said the possibility of “undue consolidation in the grocery business” raises serious concerns due to the companies’ large footprints in the state and the potential impacts on consumers and employees.
In a statement, Albertsons stood by plans for the merger and the payout. “Following the dividend payment, Albertsons Cos. will continue to be well capitalized with a low debt profile and strong free cash flow,” the company said. “Given our financial strength and positive business outlook, we are confident that we will maintain our strong financial position as we work toward the closing of the merger.