The merger between Kroger and Albertsons Companies Inc., two of the largest grocery companies in the US, is currently on ice. A court temporarily prevented Albertsons from paying a $4 billion dividend payment as part of the Kroger deal..
King County Superior Court Commissioner Henry Judson on Thursday, November 3, approved a motion by State Attorney General Bob Ferguson to temporarily block the dividend payment that was scheduled for Monday.
“I am temporarily restricting and directing Albertsons to issue its post-closing dividend”Judson said at the end of the hearing.
The ruling is the latest hurdle for plans to combine two of the country’s biggest chains. It seeks further consideration by the court of whether the payment violates antitrust laws. The payment will be blocked until next Thursday, November 10, when the judge of the Superior Court of the county, Ken Schubert closely reviews the arguments.
Some specialists say that with Kroger merging with Albertsons, in addition to making them the second largest grocery giant in the US, it could mean reduced competition, higher food prices, and even closure of underperforming locations.
A 2012 study published in the Journal of Economics and Management Strategy found that “mergers in the supermarket industry can lead to significant increases in consumer prices and thus harm consumers.”
As part of the requirements to gain regulatory approval for the merger, Albertsons and Kroger will have to sell hundreds of locations in areas where there is too much market overlap. The divestment could affect Washington, where the two companies have nearly 350 locations together, including more than 150 in the Seattle metro area.
It’s a statement, Albertsons said it “intends to lift the restriction as quickly as possible because the temporary order was based on the incorrect assertion that payment of the Special Dividend would affect its ability to compete while its proposed merger with Kroger is under antitrust review.”.
Although the ruling did not come as a surprise to some experts, they doubt the chances of success for Ferguson to convince Judge Schubert next Thursday.
Kroger in recent weeks announced the purchase of Albertsons, which owns Safeway, with an offer of $20 billion, or $34.10 per share.
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Source: La Opinion