Albertsons said yesterday that "the State of Washington Supreme Court has granted the Company’s motion to hold an expedited review of the temporary restraining order" preventing it from paying out a $4 billion special dividend ahead of its acquisition by Kroger Co.
The dividend was announced at the same time as Kroger, the country's second largest food retailer, said that it wanted to acquire fourth-ranked Albertsons for $24.6 billion, a move that would leave the newly combined company still at number two behind Walmart, but with some 5,000 stores around the US."
The expedited review means that Albertsons will not have to wait until a scheduled February 9 hearing of the state attorney general's appeal to permanently block the dividend, which is premised on the idea that it would hurt Albertsons’ ability to compete with Kroger and other retailers if the merger doesn't go through.
Albertsons continues to maintain that "that the claim brought by the Attorney General of the State of Washington, and the similar lawsuit brought by the Attorneys General of California, Illinois, and the District of Columbia, are meritless and provide no legal basis for preventing the payment of the Special Dividend. Albertsons’ position has been supported by favorable rulings in both Circuit and District courts in the District of Columbia and a Washington State court."
The deal is subject to regulatory approval by the Federal Trade Commission (FTC), with the divestiture of a number of stores in select markets expected. However, the proposed deal has been roundly criticized by some lawmakers, labor groups and consumer advocates as being bad for competition and likely to result in higher prices for shoppers.
- KC's View:
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"Expedited," I suppose, is relative - Albertsons originally wanted to pay out this dividend two months ago.
I suspect that the dividend will end up being paid out, even if it can legitimately be described as lining the pockets of private equity firm Cerberus Capital Management, which owns nearly 30% of the company's shares and holds two seats on Albertsons' board. And we'll never know what the impact would be if the merger doesn't happen, since it eventually will be approved … though the conditions of the approval at this point are anybody's guess.
