On November 8, as midterm elections were underway across the country, a Judge appointed by Trump in Washington, D.C., denied a motion for a temporary restraining order intended to end the supermarket chain Albertsons to move forward with $4 billion”exceptional dividend as part of the signing of the merger agreement” with the supermarket chain Kroger.

In a letter sent to Federal Trade Commission (FTC) Chairman Lina Khan, 26 organizations including the American Economic Liberties Project, the Center for Economic and Policy Research and the United Food and Commercial Workers International Union (UFCW)which represents more than 100,000 Albertsons and Kroger employees, feared the merger would have an undue impact Marginalized Americans.

“These monopolistic machinations will inevitably lead to layoffs, put downward pressure on wages and other employment standards, raise food prices for hard-hit consumers, increase the prevalence of food deserts in low-income communities and the number of food-insecure Americans, and stifle competition in this vital industry,” the letter read.

There remains a possibility that the special dividend will be refused.

When Albertsons first announced the proposed special dividend in an October press release, UFCW Local 400 leaders immediately flagged its timing, as well as its connection to the merger, as “unusual.” according to the letter sent to the FTC.

Cerberus Capital Management, a private equity firm, has been Albertsons’ largest shareholder since its executives would have “paid $350 million in 2006 for struggling Albertsons stores as a real estate play.” While Albertsons the financial outlook is better than 16 years ago, according to deposits with the Securities and Exchange Commission, the dividend payout would exceed its liquid assets. Plus, he would outperform the Albertsons the profits of the last 10 years and be 57 times higher than the historical dividends distributed by the supermarket, according to the union.

Why, exactly, would a company extend a dividend payout in excess of its apparent cash? The letter sent to the FTC characterized the move as “outright looting of the company by a consortium of investors”.

“This is apparently a brazen attempt to fabricate new facts on the ground by destabilizing Albertsons’ competitive position and undermining the FTC’s ability to fully exercise its statutorily mandated antitrust oversight,” the letter states, ” because the self-sabotaged shell of Albertsons who The Remains will likely argue will fail if the merger is rejected.”


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To combat such a scenario, DC Attorney General Karl A. Racine filed a complaint on Nov. 2 “asking the Court to restrain Albertsons from making payment to shareholders until a full review of the proposed merger agreement can be completed and seeks a temporary restraining order (TRO) for a immediate relief.”

This lawsuit was joined by the offices of the California and Illinois state attorneys general and filed under seal in the United States District Court for the District of Columbia.

However, Justice Carl Nichols – who clerked for Supreme Court Justice Clarence Thomas from 1997 to 1998 and was appointed to the United States District Court for the District of Columbia by former President Donald Trump in 2018 – gave Albertsons the green light to continue, according to court documents.

Like Bloomberg’s Law reportedNichols dismissed an allegation by attorneys general that the companies violated antitrust laws by agreeing to pay a dividend as part of the merger deal, finding instead that Albertsons decided to make the payment ‘unilaterally’ .

The lawsuit also claimed that the payment of the dividend, which Albertsons plans to partially fund with $1.5 billion in debt, would leave the company without enough cash to compete if the deal stalled due to competition concerns. Nichols said the attorneys general presented “insufficient evidence” to support their claim.

The judge Noted that the company had reported strong earnings and that the dividend payment had been vetted by investment banks and approved by Albertsons’ board. Stopping the payout would “interfere” with the board’s decision and hurt shareholders, Nichols concluded.

“It is unfortunate that Judge Nichols has sided with a handful of ultra-wealthy board members and shareholders instead of the countless essential workers whose livelihoods are threatened by this outright plunder. of the Albertsons”

In a Declaration of November 8representatives of UFCW Local 400 have condemned Nichols’ decision, but they haven’t given up hope yet.

“It is unfortunate that Judge Nichols has sided with a handful of ultra-wealthy board members and shareholders instead of the countless essential workers whose livelihoods are threatened by this outright plunder. of Albertsons,” the statement read. “To be clear, the unprecedented $4 billion special dividend sought by Albertsons remains on hold under a temporary restraining order issued by a Superior Court Commissioner for King County in Washington State and the Today’s decision has no bearing on this matter.”

The statement referred to the fact that Washington State Attorney General Bob Ferguson also filed a lawsuit in state court seeking to stop payment. Last week King County Superior Court Commissioner Henry Judson approved a temporary restraining order prevent Albertsons from paying a special dividend while the court determines whether the payment violates state antitrust laws.

“We commend Attorney General Karl Racine and his team for standing up for American grocers and consumers in bringing this lawsuit to a successful conclusion,” the statement continued. “We will continue to put every resource at our disposal to prevent this cash grab and protect the thousands of union workers who will be left behind if this deal goes through.”

food fair has reached out to Albertsons and Cerberus, but requests for comment were not returned until press time.

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