WASHINGTON, Dec 1 (Reuters) – The attorneys common of California, Illinois and Washington D.C. requested a federal court docket on Thursday for a preliminary injunction that will forestall Albertsons Firms Inc (ACI.N), which is being bought by rival Kroger Co (KR.N), from paying a $4 billion dividend to shareholders.
The state officers mentioned in a court docket submitting that Kroger, which doesn’t but personal its rival, agreed with Albertsons that Albertsons would pay the dividend in the beginning of the merger evaluate.
“Fee of the particular dividend, along side the restrictions defendants’ merger settlement imposes on Albertsons’ means to borrow cash, doubtless will hamper Albertsons’ means to compete with Kroger and different grocers, leaving customers dealing with increased costs, worse service, much less innovation, closure of their native Safeway or different Albertsons grocery store, or the entire above,” they mentioned within the submitting.
California Lawyer Normal Rob Bonta mentioned in a press release that he was decided to cease the $4 billion handout. “We’re not going to cease preventing to make it possible for the proposed merger does not hurt California households, staff, and farmers,” he mentioned.
Albertsons didn’t instantly reply to a request for remark. The corporate has mentioned that it was in a robust place financially and that the dividend is not going to damage it.
The lawsuit was filed in federal court docket in Washington, D.C.
Albertsons had been initially scheduled to pay the particular dividend on Nov. 7.
A court docket on the opposite facet of the nation, in Washington state, has put a brief restraining order on the cost and mentioned it could proceed to stay on maintain till a listening to scheduled for Dec. 9.
Kroger snapped up Albertsons in a $25 billion deal in final month’s mega merger between the No. 1 and a pair of standalone grocers, saying that the deal would assist it higher compete in opposition to U.S. grocery business chief Walmart Inc (WMT.N) on costs. The deliberate acquisition has come beneath sharp criticism on antitrust grounds.
Reporting by Diane Bartz; enhancing by Diane Craft
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