LOS ANGELES – As regulators review the proposed merger of supermarket giants Albertsons and Kroger, California Attorney General Rob Bonta and two other AGs Wednesday asked a federal court to temporarily block Albertsons’ planned $4 billion payment of a special dividend to shareholders.
The payment is planned for Monday, and the AGs expressed concern that it would hamper Albertsons’ ability to compete. Their complaint follows a letter sent to Albertsons and Kroger last week arguing that the planned payout is premature and would substantially deplete Albertsons’ cash flow as inflation drives up prices and an economic downturn appears imminent.
The AGs are seeking to delay the payout while regulatory review of the proposed merger is ongoing.
“Albertsons and Kroger are the second and third largest grocery chains in the U.S., with nearly 5,000 stores between them, including hundreds in California,” Bonta said in a statement.
“As inflation drives up grocery prices, a decrease in competition has the potential to be devastating for hardworking California families and for those who work at these stores. This proposed merger is far from a done deal, making Albertsons’ decision to give away one-third of its market cap very concerning. I urge the court to delay this payout to allow for a thorough consideration of its impacts on Albertsons’ ability to compete while the proposed merger is under review.”
Six locals of the United Food and Commercial Workers union — including Local 770 in Los Angeles and Local 324 in Buena Park — along with a Teamster local, lauded the move by the AGs in a joint statement.
“This dividend would cripple Albertsons’ ability to operate its stores, threatening the jobs of thousands of essential workers and making groceries more expensive and scarce for millions of families,” said Kathy Finn, UFCW Local 770 president.
“We’re proud Attorney General Rob Bonta is acting to stop Albertsons from robbing our communities to pay its private equity shareholders. Albertsons should be lowering prices for hard-working people and investing in essential workers instead of wiping out the company’s cash and doubling its debt to fatten executives’ pocketbooks,” she continued.
Local 770 represents nearly 20,000 grocery store employees at stores owned by Kroger or Albertsons, including Ralphs and Food4Less, Albertsons, Vons and Pavilions stores in Los Angeles, Ventura, Santa Barbara and San Luis Obispo counties.
Albertsons and Kroger supply daily necessities to millions of people throughout the United States and employ more than 700,000 workers in communities across the country.
Bonta said the state attorneys general are dedicated to ensuring that the proposed merger of the grocery behemoths complies with federal and state antitrust law and does not result in higher prices for consumers, suppressed wages for workers, or other anticompetitive effects.