The announced acquisition of Boise-based Albertsons by the Kroger Company still has to pass muster with federal regulators. But Albertsons is already facing pushback on a special dividend equal to about one-third of the company’s total value.
The dividend will pay $6.85 per share to stockholders as of October 24, distributed next month. Most of the $4 billion will go to Cerberus and other private equity owners.
Center for Economic and Policy Research Vice President Eileen Applebaum called it a “spectacular windfall,” writing that the dividend could set Albertsons on the road to bankruptcy - potentially strengthening an argument that a merger is needed to save the company.
The dividend would increase the company’s debt, according to the Philadelphia Inquirer, but its debt ratio - a key measure of financial stress - would still be below pre-pandemic levels.
In the merger announcement, Kroger said it would spend $1.5 billion to bring prices down and push employee wages up and could do that thanks to cost savings found in the scale of the combined company; potentially nearly 5,000 stores (subject to the number of directly competing stores regulators force out of the deal), 66 distribution centers and 52 manufacturing facilities.
Some union leaders are concerned about the potential impact of the merger and the dividend.
Reuters reported that multiple chapters of the United Food and Commercial Workers International were considering labor action in opposition to the merger. Those chapters, in Colorado, Wyoming, California, Maryland, Ohio, Tennessee and Virginia, represent about 100,000 workers - approximately one-seventh of the estimated post-merger workforce.
“We need more information,” said Miles Eshaia of UFCW Local 555 in Oregon. That chapter represents workers from both Albertsons and Kroger and recently led Kroger employees on a week-long strike in December which ended after a new contract agreement was reached.
“We're not really going to go much beyond that except to say, regardless of what happens, our members’ contracts are going to be in place, their pensions are going to be secure and their wages are going to remain the same,” Eshaia told Boise State Public Radio.
Contracts are generally three years long, he said, though some may be longer. The merger is set to close in early 2024 if all goes according to plan.
Albertsons did not respond to a request for comment.
