SEATTLE — A King County judge on Friday ruled that Albertsons’ plans to pay out $4 billion in dividends to shareholders can go forward amid its increasingly contentious merger with another grocery giant, Kroger.
Judge Ken Schubert rejected the assertion put forward by Washington Attorney General Bob Ferguson’s office that the dividend should be blocked because it might so badly weaken Albertsons, which also operates Safeway, as to violate state consumer protection laws.
The attorney general’s office expects to appeal Schubert’s ruling to the state Supreme Court for emergency review. Doing so is likely to prevent Albertsons from paying out the dividend until the higher court rules.
Attorneys for Albertsons and Kroger, owner of QFC and Fred Meyer, argued that the dividend payment was already in the works before the merger began taking shape, an argument Schubert found persuasive.
“It’s not like the two of them got together and said, ‘How can we screw the consumers of Washington state, or the nation?’ ... There was no such agreement,” Schubert said from the bench Friday. “Albertsons from the start wanted to get rid of this money.”
Schubert noted that only the dividend payment, which amounts to $6.85 per share, was before him, not the $25 billion merger.
An Albertsons-Kroger merger would join two of the nation’s largest grocery chains. It has drawn congressional scrutiny in recent weeks, and will be subject to reviews by federal regulators.
Critics worry the deal could mean reduced competition, higher food prices and even the closure of underperforming locations, while the grocery giants argue they must combine to remain competitive in an industry dominated by Walmart and facing increasing pressure from Amazon.
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