Got a statement yesterday from critical issues firm Brunswick Group, detailing Albertsons’ response to our story about Washington State Attorney General Bob Ferguson filing a lawsuit to prevent Albertsons from paying investors a $4 billion dividend in advance of the company’s proposed merger with Kroger:
“The lawsuit brought by the Washington State Attorney General is meritless and provides no legal basis for canceling or postponing a dividend that has been duly and unanimously approved by Albertsons Cos.’ fully informed Board of Directors. As Albertsons Cos. stated publicly when it announced its Board-led review of strategic alternatives in February, capital return strategies were among the potential options to enhance growth and maximize shareholder value. The special dividend announced on October 14 is the means by which we are independently executing our longstanding capital return strategy and is scheduled to be paid to Albertsons Cos.’ stockholders on November 7. It is not contingent on our merger with Kroger and is not in any way a condition to Albertsons Cos.’ or Kroger’s obligation to consummate the proposed merger – it will be paid regardless of whether the merger is completed. The allegation that this dividend will somehow hinder our ability to compete in the marketplace is also meritless. Given our financial strength and positive business outlook, we are confident that we will maintain our strong financial position as we work toward the closing of the merger. Additionally, payment of the special dividend will not hinder Albertsons Cos.’ ability to continue investing in our stores and technology to provide an even better shopping experience while we continue to operate as an independent company, and it will not impact the agreements that we have made with unions representing our associates to increase wages and benefits. Our planned combination with Kroger will provide significant benefits to consumers, associates, and communities and offers a compelling alternative to larger and non-union competitors.”
KC’s View:
Noted.
We’ll see how this plays out in court. Or, maybe I should say “courts,” since in addition to the Washington State AG’s state court suit, yesterday the attorneys general of California, Illinois and Washington, DC, all filed a suit in US District Court to delay any dividend until the proposed merger can be reviewed.
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