A state court in Washington has temporarily blocked Albertsons Companies Inc from paying a $4 billion dividend to shareholders before the grocery chain closes its proposed deal with rival Kroger Co , documents filed said on Thursday.
Albertsons, which was scheduled to pay the special dividend on Nov. 7 as part of the deal, was also sued by the attorneys general of District of Columbia, California and Illinois, arguing that it would weaken its ability to compete as the antitrust reviews go on.
"By eliminating its cash-on-hand and nearly doubling its debt, Albertsons will be in a weakened competitive position relative to Kroger, thereby harming grocery consumers and workers throughout Washington," State Court Commissioner Henry Judson wrote in issuing the temporary restraining order."Putting the brakes on this $4 billion payment is the right thing for Americans shopping at their local grocery store," he said in a statement.
Albertsons called the lawsuits brought forward by the AGs "meritless," and said the company had limited debt and significant free-cash flow and was in a strong position financially. The AGs have also raised concerns that a dividend payout would make the retailer strapped for cash, adding that it would hamper the company's ability to price competitively and maintain staffing and staff wages and benefits.
Reporting by Rhea Binoy and Shivani Tanna in Bengaluru; Editing by Rashmi Aich and Sherry Jacob-Phillips
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