Colorado attorney general opposes Kroger-Albertsons merger, dividend payout to investors
Workers and community members form a picket line outside a Denver King Soopers, after United Food and Commercial Workers Local 7 began a strike over stalled labor negotiations on Jan. 12, 2021. (Chase Woodruff/Colorado Newsline)
Colorado Attorney General Phil Weiser filed a brief this week urging a Washington state court to block Albertsons’ $4 billion payout to investors during the review of the company’s merger with Kroger.
In a news release Thursday, Weiser reiterated his concerns behind the Kroger-Albertsons merger, into which his office is leading a multistate investigation. The release warns the merger could lead to higher prices, lower wages, fewer jobs and negative impacts for farmers and suppliers. Kroger operates popular Colorado grocery stores including King Soopers and City Market, while Albertson’s operates Safeway following a merger in 2015.
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“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,” Weiser said in a news release. “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.”
The Local 7 chapter of the United Food and Commercial Workers International Union praised Weiser’s actions on the dividend and merger, having opposed the merger because of how it will negatively impact employees. The union represents over 17,000 grocery employees between the two companies in Colorado and Wyoming.
“This planned special dividend to mega rich shareholders will weaken Albertsons’ financial position, saddle the company with debt, weakens Albertsons’ ability to ensure pensions are paid to workers and retirees, and ultimately hurts the stores our members work at, endangering hundreds of thousands of jobs throughout the country,” UFCW Local 7 said in a statement.
Oral arguments to temporarily block the dividend are scheduled for Friday in King County Superior Court. Weiser encouraged the court to review the “failed divestiture” that came following Albertsons’ merger with Safeway in 2015. According to the news release, the Federal Trade Commission required the company to sell 168 stores as part of the merger. One company, Haggen, bought 146 of the stores just to go bankrupt months later after a $20 million dividend was paid to a private equity shareholder on top of an accelerated $25 million loan repayment to the same shareholder. Albertsons regained many of these stores at a discount and purchased the Haggen name.
A message left with Albertsons’ media line seeking comment was not immediately returned.
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