Colorado attorney general pushes for block of $4 billion payout to Albertsons’ investors pending merger review
DENVER, Colo. (KKTV) - Colorado Attorney General Phil Weiser is urging a Washington State court judge to block Albertsons’ $4 billion payout to its investors while the company’s merger with Kroger remains under state and federal review.
In a press release from the Attorney General’s office released on Thursday, Weiser says this payout would deplete the company’s cash reserves, bury it further in debt, and affect enforcement actions from the regulatory review of the merger.
“If the special dividend is allowed to be paid out to investors, it would lessen Albertsons’ ability to compete not only during the pendency of the merger review, but also in the event that the merger is blocked and Albertsons has to continue on its own,” said Weiser. “The special dividend also risks devaluing any stores that would be part of a potential divestiture by limiting Albertsons’ ability to make capital improvements to those stores, provide routine maintenance, or even ensure proper inventory. That, in turn, could poison the well for any potential divestiture remedy.”
Weiser’s office is leading a multi-state investigation of the proposed Kroger/Albertsons’ merger amid concerns that, if approved, it could result in higher prices for Colorado consumers, lower wages for workers, fewer jobs, and negatively impact farmers and local suppliers.
Many lawmakers and labor unions have also expressed the same concerns over the potential monopoly that would result from the merger, but the CEO’s for both Kroger and Albertsons’ maintain that the partnership would be a benefit for both companies and consumers.
Both CEO’s attended a Senate hearing in November regarding the proposed merger; this is what they had to say:
“This merger will give us the flexibility, national footprint and digital capabilities to compete more effectively,” said Rodney McMullen, Chairman and CEO, Kroger Co. “Our commitment is to provide fresh, affordable food for everyone.”
“Our philosophy is locally great, nationally strong,” Vivek Sankaran, President and CEO, Albertson Companies, Inc. “The best way to compete with mega stores like Walmart and highly capitalized online like Amazon will be through a merger with Kroger.”
Oral arguments on the motion to temporarily block the payout is scheduled for Friday, Dec. 9 in King County Superior Court.
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