Washington sues state to block Albertsons’ $4 billion in damages payment to shareholders

(Reuters) – Washington State Attorney General Bob Ferguson filed a lawsuit on Tuesday to prevent grocery chain Albertsons Cos Inc. from paying a dividend to shareholders before closing its proposed merger with supermarket company Kroger.

According to a statement posted on the Washington attorney general’s website, the $4 billion payment to shareholders “severely threatens to undermine the grocery giant’s ability to compete during the extended period of time that government regulators — including Washington — will examine the merger.”

Kroger acquired Albertsons in a $25 billion deal last month, creating the US grocery giant to better compete with price leader Walmart, but which was expected to face antitrust roadblocks.

The AG will file a temporary restraining order on Tuesday or Wednesday, which, if granted, would prevent Albertsons from making the payment while Ferguson’s lawsuit continues.

“Paying $4 billion before regulators can do their job and review the proposed merger will impair Albertson’s ability to continue commercial operations and compete,” Ferguson said.

Kroger and Albertsons did not immediately respond to a request for comment on the AG’s lawsuit.

In late October, District of Columbia District Attorney Carl Racine said half a dozen state attorneys general were digging into Kruger’s planned acquisition of the Albertsons.

(Reporting by Gobi Babu in Bengaluru; Editing by Sherry Jacob Phillips)

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