Oregon AG files court action opposing Albertsons payout amid proposed Kroger merger

Oregon’s lawyer basic is backing a Washington state lawsuit in opposition to grocery chain Albertsons over a large payout to shareholders amid its proposed merger with Kroger.

In an amicus temporary filed Wednesday, Oregon Legal professional Normal Ellen Rosenblum calls the payout a “gutting of money reserves” that can scale back “Albertsons’ skill to aggressively compete with Kroger” through the a number of years it might take for the merger to finish.

Albertsons was set to pay a money dividend of $6.85 per share to stockholders, totaling about $4 billion. A choose final week stayed the payout with a brief restraining order after Washington Legal professional Normal Bob Ferguson sued the corporate. The block is in impact till Nov. 17.

Attorneys basic in Illinois, California and the District of Columbia have additionally filed courtroom actions supporting the swimsuit. They and Rosenblum argue the payout would weaken Albertsons’ skill to maintain up with stock and staffing, thus driving prospects to Kroger shops. The attorneys basic additionally allege it might make Albertsons an easier-to-purchase suitor.

Albertsons has defended the dividend, and insisted it has sufficient money to make the payout whereas nonetheless working its grocery shops.

The businesses are important gamers within the Northwest grocery market. Kroger owns a number of grocery store chains, together with Fred Meyer and QFC, whereas Albertsons owns the namesake Albertsons shops and Safeway. Collectively, they make up a big majority of Oregon grocery shops.

Albertsons operates greater than 120 shops in Oregon, in keeping with Rosenblum’s temporary, and Kroger owns a complete of 55 Fred Meyer and QFC shops. In some Oregon cities — together with The Dalles, Sandy, Tillamook and Florence — Albertsons and Kroger shops “seem like the one main grocery retailers and head-to-head opponents,” Rosenblum writes.

The proposed merger continues to be beneath assessment by federal regulators.

Rosenblum’s temporary cites Albertsons’ acquisition of Safeway in 2015 as a harbinger of what’s to return. After the acquisition, federal regulators required Albertsons to promote shops to a different firm, with the hope of making a regional competitor. Albertsons offered 146 shops to Haggen, however shortly after, Haggen sued Albertsons over anti-competitive practices. Haggen later filed for chapter.

“Following Haggen’s chapter submitting, Albertsons repurchased seven Oregon shops it had divested to function them beneath the Albertsons banner, and shuttered shops as effectively, exhibiting divestitures failed, and competitors suffered,” Rosenblum writes.

In a press launch, Kroger says its merger with Albertsons will “broaden buyer attain and enhance proximity to ship recent and reasonably priced meals to roughly 85 million households with a premier omnichannel expertise.”