COLORADO SPRINGS, CO — In mid-October Kroger, the parent company of King Soopers announced its intention to go through with a merger with Albertsons companies.
The merger would have been one of the largest grocery store mergers in US history and would have seen a total of $4 billion dollars paid out to shareholders of Albertson companies.
Advocates, unions, and union workers across the country immediately expressed their concerns. As the payouts would most likely lead to the closing of many Albertson company locations and layoffs as a result of the merger.
In alawsuit filed in the King County Court of Washington on Tuesday, Attorney General Bob Ferguson asked the court to block the special dividend payout stating that it could violate antitrust laws.
On top of that, Ferguson outline exactly how this special dividend payout could destroy Albertsons if the merger fell through.
Ferguson argued, "Paying out the $4 billion will cripple Albertsons’ ability to operate its stores and meaningfully compete with Kroger during the time before the deal closes and leave it in a weakened state if the deal subsequently falls apart.”
This is amplified by the issue on Albertson's side paying the dividend out from its operating cost budget, not surplus profits limiting its ability to operate efficiently until the merger is complete.
This paired with the deal requiring Albertson store locations to be sold off in order to reduce the market competition between overlapping Kroger stores in markets. In our local area, we could see the reduction of Alberston-owned Safeway stores in the Colorado Springs market.
King County Court agreed on Thursday to halt the special dividend payout scheduled for Monday.
King County Court Commissioner Henry Judson agreed with Ferguson stating, “I am temporarily restraining and enjoining Albertsons from issuing its post-closing dividend,”
The dividend is now set for a payout next Thursday giving the court more time to review the details of the merger and see if it violates antitrust laws.
The United Food and Commercial Workers Union immediately began to take action in Washington and across the nation expressing their concern.
In a statement following Thursday's ruling UFCW stated, “We applauded these attorneys general when they filed their lawsuits, and we applaud Washington State Attorney General Ferguson and his team for presenting a strong case yesterday and, at least temporarily, putting a pause on Albertsons’ $4 billion payout for rich stockholders instead of investing in lowering prices, improving store safety and increasing the wages of the workers in the store who made the stores function all during the height of the COVID-19 pandemic.”
So for now it appears the deal is on pause until it can be more thoroughly reviewed. So for now Coloradans will be waiting in limbo over the future of King Sooper stores and Safeway stores in our local market.
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