California, others ask court to temporarily block Albertsons $4B dividend

Mario Tama

California, Illinois and Washington D.C. asked a federal judge on Thursday to temporarily block the payment of an Albertsons (NYSE:ACI) dividend connected with its planned sale to Kroger (NYSE:KR), according to a court filing and a press release.

The court filing comes after the same judge last month rejected a temporary restraining order the states had asked for to halt payment of the $4 billion dividend. US District Judge Carl Nichols denied the request made by attorneys general to block the dividend temporarily.

"Following the decision of this Court, Plaintiffs have continued to investigate the circumstances surrounding the decision to issue the special dividend and the potential effects that its payment and other restrictions Defendants’ Merger Agreement places on Albertsons are likely to have on competition, workers, and consumers, during the pendency of the merger review and beyond," the states said in the filing.

The court filing follows as a judge in Washington state in set to hold a hearing on a preliminary injunction on the Albertsons (ACI) $6.85/share dividend payment on Dec. 9 after he granted a temporary restraining order last month.

Albertsons said on Nov. 16 that it continues to believe that the claim brought by the State of Washington is meritless and provides no legal basis for canceling or postponing a dividend that has been duly and unanimously approved by Albertsons Cos.’ fully informed board of directors.

News of the latest court filing was earlier reported by Reuters.

Kroger (KR) and Albertsons executives testified on Wednesday before a Senate hearing as lawmakers grilled them over possible antitrust concerns and potential higher prices from the $25 billion transaction.