The Washington Supreme Court has indefinitely extended a temporary restraining order (TRO) holding up a $4 billion special dividend payment by Albertsons Cos. announced in the unveiling of its mega-merger with The Kroger Co.
Washington state’s high court ordered late Friday that the dividend payment to Albertsons shareholders, originally slated to be made Nov. 7, remain suspended pending further review. In a Dec. 9 hearing, King County Superior Court Judge Ken Schubert had denied the state’s request for a preliminary injunction against the payment but extended the TRO to Dec. 19 at 4:30 p.m. PST. The state filed an emergency motion with the state supreme court later on Dec. 9, and the court upheld the request to continue the TRO.
“The State of Washington Supreme Court has continued the temporary restraining order against the company’s previously announced $6.85-per-common share special dividend while the Washington Supreme Court considers if it will hear the state’s appeal,” Boise, Idaho-based Albertsons said in a statement late Friday.
Albertsons also reported that it has filed a motion to expedite the state high court’s review. “The TRO will remain in effect until there is a further order issued by the court,” the supermarket retailer stated.
Washington State Attorney General Bob Ferguson applauded the state supreme court’s order on Twitter.
“Washington Supreme Court grants our request to continue blocking #Albertsons from paying its $4 billion dividend. The temporary restraining order will remain in place until the court takes further action,” Ferguson said in a tweet Friday.
In its order, the Washington Supreme Court determined that the TRO extension was necessary so the court can fully consider whether an appeal is warranted.
“The [King County] superior court did not find evidentiary support for the state’s request for a preliminary injunction. Determining whether that was a correct decision will require careful review of the records thus far provided. The state does not make a compelling case at this juncture that it will prevail in the end, but the issue is at least debatable for purposes of determining whether discretionary review is merited … and whether the case should stay in this court or be transferred to the Court of Appeals,” the court order said.
“The superior court determined it was necessary to extend the TRO to Dec. 19 for that reason,” the order continued. “The same reasoning supports extending the TRO further at least until the discretionary review and direct review questions are resolved.”
Albertsons’ special dividend payment has been frozen under a TRO attained Nov. 3 by Washington AG Ferguson. The state contends that the $4 billion dividend payment, if made, would impede Albertsons’ ability to operate and compete as well as potentially harm consumers and workers. The AG’s office also claims the payment, as planned, is anticompetitive because it’s tied to a merger agreement. Albertsons and Kroger, however, have said the dividend is a separate matter for Albertsons and not part of the merger deal.
AGs in the District of Columbia, California and Illinois in November also sued to block the dividend payment. Earlier this month, Colorado AG Phil Weiser had called for Washington state to block the Albertsons dividend payment in a brief filed with King County Superior Court and noted that his office is leading a multistate investigation of the proposed Kroger-Albertsons merger.
Under the $24.6 billion merger deal, unveiled on Oct. 14, Kroger plans to acquire all outstanding shares of Albertsons common and preferred stock for about $34.10 per share. Plans for the Nov. 7 special dividend payment, of up to $4 billion, were disclosed in that announcement. The companies said they expect to close the transaction in early 2024, but industry observers say regulatory clearance could take up to two years.