Dive Brief:
- A federal court in Washington, D.C., has denied a temporary restraining order requested by the attorneys general of California, Illinois and Washington, D.C., against Albertsons’ $4 billion special dividend, the grocer announced Tuesday.
- The shareholder payment, which was originally slated for Nov. 7, remains blocked due to a ruling in a Washington state court late last week. The future of the dividend awaits a hearing this Thursday before a judge in that state.
- The dividend payment is halted until Thursday unless an order extends or dismisses the temporary restraining order in Washington state, Albertsons said.
Dive Insight:
The U.S. District Court’s rejection of the attempt by the three attorneys general to block Albertsons’ dividend narrows the potential path to victory for opponents of the dividend.
The attorneys general for California, Illinois and Washington, D.C., in a joint suit, made an argument similar to the one by Washington Attorney General Bob Ferguson that the dividend would gut Albertsons’ financial health and hinder the company’s ability to remain competitive in the grocery landscape as its proposed tie-up with Kroger undergoes regulatory review.
In Washington state, King County Superior Court Commissioner Henry Judson agreed with that argument. “By eliminating cash-on-hand and nearly doubling its debt, Albertsons will be in a weakened competitive position relative to Kroger, thereby harming grocery consumers and workers throughout Washington,” Judson wrote in his ruling.
Albertsons has maintained its position that the dividend would not hinder its ability to compete, and the grocery company is seeking to overturn the temporary restraining order in Washington state. The grocer said last week it has a “thriving business” that tallied more than $75 billion in revenue over the four financial quarters ending in early September.
In a press release in response to the court in Washington, D.C., Albertsons reiterated its stance and noted that the dividend “has been duly and unanimously approved by Albertsons Cos.’ fully informed Board of Directors.”
Albertsons said it would have approximately $3 billion of liquidity, including approximately $500 million in cash and approximately $2.5 billion available under its asset-based lending facility, available after the dividend payment. The company said it plans to “continue to generate strong revenues and positive free cash flow, further increasing liquidity.”
