Dec 22, 2022 - Economy

Albertsons will need to wait 'til next year for its $4 billion dividend

Illustration of an Albertsons' grocery bag inside of a Kroger's bag.

Illustration: Shoshana Gordon/Axios

Albertsons shareholders won't be getting a $4 billion Christmas present, after the Washington state Supreme Court said it won't review legal challenges to the grocer's special dividend until Feb. 9, 2023.

Why it matters: Albertsons remains likely to prevail, but wanted the dividend paid in 2022 for tax purposes.

Catch up quick: Kroger in October agreed to buy Albertsons for $24.6 billion, in a deal that would combine the country's second and fourth-largest food retailers.

  • The companies also announced, in the same press release, that Albertsons would pay a $4 billion special dividend to shareholders on Nov. 7, which would be before the deal closed or had the opportunity to be reviewed by U.S. antitrust regulators. Among the beneficiaries would be private equity firm Cerberus Capital Management, which holds more than a 28% stake in Albertsons.
  • Washington state Attorney General Bob Ferguson filed a lawsuit seeking to block the dividend, arguing that it would put Albertsons at a competitive disadvantage to Kroger. AGs in California, Illinois and D.C. then did the same, but didn't get the same sort of judicial traction.

What to know: Washington courts have given Ferguson every opportunity to prove his case, while also pointing out that he's facing long odds.

  • There's also some irony in play, as big U.S. companies often use state courts to drag out lawsuits, whereas federal courts prefer to expedite time-sensitive cases. In this case, the dichotomy is being used against the corporate interest.
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