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‘Massive improper giveaway’: Attorneys General ask Albertsons to halt dividend payment

Albertsons on State Street
Posted at 5:24 PM, Oct 26, 2022
and last updated 2022-10-26 19:24:50-04

This article was originally published by Don Day in BoiseDev.

A bipartisan group of state attorneys general has said Albertsons Companies should pause its planned dividend payment next month.

As BoiseDev reported this week, as part of its merger with Kroger, the company said it would pay a nearly $4 billion dividend to shareholders. The payment is set for next month — while the Kroger acquisition, should it close, isn’t expected until 2024.

Washington, DC Attorney General Karl Racine spoke on CNBC’s Squawk Box Wednesday morning and said the dividend payment “could be a massive improper giveaway to certain shareholders.”

If the deal were to not go through, Racine said the dividend payment would hobble Albertsons, and make it harder for the chain to compete in a “very, very tough marketplace.”

Racine said his group wrote a letter to Albertsons asking it to voluntarily pause the dividend payment. But he said on CNBC that if the company doesn’t respond voluntarily, they could seek an injunction in court to stop the payment. Reporting from CNBC and Bloomberg didn’t say which states’ attorneys general were in the bipartisan group.

Before Racine’s letter, Albertsons told BoiseDev that it would still be able to operate appropriately with the dividend payment.

“The special dividend allows us to return cash to all of Albertsons Companies’ shareholders prior to the anticipated closing of the merger with Kroger in early 2024,” the spokesperson wrote. “Albertsons Cos. is well capitalized with strong free cash flow and expects to maintain its strong financial position as we work toward closing.”

The dividend payment, as BoiseDev reported, would primarily flow to a group of private equity investors led by Cerberus Capital Management. The group owns a controlling stake in Albertsons.