On Thursday, Karl Racine, the Attorney General for Washington D.C., announced an investigation into Kroger Co.’s proposed acquisition of Albertsons Companies and Albertsons Special Dividend. Additionally, he and a bipartisan group of attorneys general are requesting Albertsons hold off paying out nearly $4 billion to its shareholders through the Special Dividend until they can review the proposed merger.
On October 14, the two grocery store chains announced the proposed deal valued at $24.6 billion through a joint press release. The merger of the two rivals would combine the two largest operators of stores dedicated to groceries with their combined sales representing 16% of the market. Law Street Media previously reported on the announcement of the proposed merger.
On the same day the merger was announced, Albertsons also announced a Special Dividend for its shareholders at $6.85 per share that would be distributed on November 7. The total value of the Special Dividend is nearly $4 billion which is worth more than two years of Albertsons’ profits. The OAG argues that the Special Dividend risks significantly limiting the company’s ability to operate and properly compete with Kroger which in turn would seriously impact consumers, workers and the grocery market before any regulatory oversight.
The announced deal anticipated regulatory scrutiny and formulated a plan to spin off up to 650 of their stores to ease antitrust concerns and accelerate regulatory approval. However, the effort has seemed to miss the mark given the announcement and associated letter to Kroger and Albertsons.
In the press release, the OAG states that it will examine whether the additional consolidation in the grocery industry through the merger could lead to higher food prices with inflation at historically high levels resulting in families across the country struggling to afford to put food on the table. Further, the press release purports that the OAG will examine whether the Special Dividend or the merger could reduce good, high-paying jobs and hurt wages and benefits for workers.
D.C. Attorney General Karl A. Racine stated that he hopes Albertsons will not proceed with the Special Dividend while the merger is assessed for anti-competitive, anti-consumer or anti-worker issues, but states that the Attorney Generals “are actively exploring other options to achieve our objectives, including litigation.”
The bipartisan letter was led by Attorney General Racine who was joined by the Attorney Generals of Arizona, California, Idaho, Illinois and Washington.
