Albertsons won’t pay $4 billion in dividends on Monday after all. What just happened

Albertsons won’t be making that giant dividend payout to shareholders on Monday after all.

Albertsons said Washington state Attorney General Bob Ferguson has been granted a temporary restraining order regarding the $4 billion special dividend payout.

Ferguson sued Albertsons and Kroger on Tuesday to block the Boise-based grocery retailer from the payout until state and federal antitrust regulators had reviewed the company’s proposed merger with Kroger, a larger competitor.

Part of that merger included the payout — $6.85 per share — to Albertsons shareholders by Monday, Nov. 7. Ferguson said the payout would “weaken” Albertsons’ ability to continue business operations and compete. Albertsons told McClatchy News that Ferguson’s case was “meritless.”

The order remains in effect until Monday, Nov. 10, when a hearing to consider the merits of the lawsuit is scheduled.

“Albertsons Cos. continues to maintain that the lawsuit brought by 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 canceling or postponing a dividend that has been duly and unanimously approved by Albertsons Cos.’ fully informed board of directors,” Albertsons said Thursday in a news release.

Albertsons said it had generated over $75 billion in revenues in the four quarters ending Sept. 10.

“The size of the dividend reflects the company’s strength,” Albertsons said, “rather than the illogical and damaging accusation that it is an attempt to weaken the company.”

According to the Washington State Office of the Attorney General, the $4 billion payment exceeds Albertsons’ cash in hand. Ferguson’s office said that, according to filings with the Securities and Exchange Commission, Albertsons plans to make the payment with $2.5 billion cash in hand and to borrow the rest of the money from elsewhere.

Albertsons said it plans to “argue vigorously” that there is “no basis to continue restraining the payment of the special dividend.”

Some unions have applauded Ferguson’s lawsuit and TRO.

“This dividend would cripple Albertsons’ ability to operate its stores, threatening the jobs of thousands of essential grocery store workers and making groceries more expensive and scarce for millions of families,” said Sam Kantak, secretary-treasurer of Teamsters 38, a labor union unit based in Everett, Washington, in a news release.

Albertsons has sold stock publicly since June 2020 but remains controlled by Cerberus Capital Management, a New York private equity firm that leads a group of investment companies that first acquired part of the former Albertsons Inc. in 2006. Cerberus alone still holds roughly 30% of Albertsons’ shares and would collect a large share of the special dividend.

“We’re proud Attorney General Ferguson took leadership in acting to stop Albertsons from robbing our communities to pay its private equity shareholders,” Kantak said. “Albertsons should be lowering prices for hard-working people and investing in essential grocery store workers instead of handing billions of dollars of the company’s cash over to pad executives’ pocketbooks.”

But a spokesperson for a union representing more than 1,000 Albertsons grocery workers in Idaho said his union has yet to decide whether to support or oppose the merger.

“We need more information before we really start talking about this,” said Miles Eshaia of the United Food and Commercial Workers’ Local 555, based in Tigard, Oregon, by phone.

Albertsons is Idaho’s largest company and a Boise icon, with 290,000 employees nationwide and more than 5,000 employees in Idaho, McClatchy News previously reported.

Idaho Statesman Business and Local Government Editor David Staats contributed.