A Washington State court partially granted a request to extend the temporary block of the special $4 billion dividend planned by Boise-based Albertsons.
The temporary restraining order issued by a Superior Court Commissioner November 3 was extended another week to allow additional testimony and evidence. The decision came just two days after a federal court declined to block the dividend.
“This is a motion for a preliminary injunction, not a motion for a TRO, which is what he was hearing,” Eric Newman said Thursday about the federal hearing earlier in the week. Newman was arguing on behalf of the state in front of Judge Ken Schubert.
The state had motioned for a preliminary injunction, wanting to call and cross-examine witnesses, including C-suite executives at Albertsons and Kroger, and argued it needs more time to gather additional evidence and fully prepare its case. An injunction could push the case out a month or more.
Schubert seemed to agree, saying the timing of the dividend announcement - simultaneous with the merger announcement on October 14 - left plenty of legitimate questions in its wake.
“I think it's also important to tease out from the Albertsons witnesses in particular, ‘did you discuss whether or not this might weaken your ability to compete with anyone?’” the Judge said. “I’m intrigued to know a bit more on that.”
Schubert also acknowledged his view that the state has “an uphill battle” in the case but said he recognized allowing the dividend to go forward would be irreversible.
The parties agreed to bring executives to testify at hearings next week, and extend the temporary restraining order by just seven days.
Attorneys also went back and forth over document discovery, with the state claiming Albertsons had not fulfilled its requests. Albertsons attorneys said they had turned over everything relevant between the cases in Washington State and federal courts as well as what’s already been provided to regulators at the Federal Trade Commission.
Concern over the confidentiality of business practices was addressed with the promise of a protective order sealing many documents to be filed Monday.
A $6.85 special dividend was set to be paid November 7 to Albertsons shareholders of record as of October 24. Most of those shareholders are the private equity groups that owned the company before taking it public in 2020 and still maintain majority control.
Critics, including several Attorneys General, say the dividend appears to put the company’s financial health in jeopardy.
Albertsons has continued to say the dividend will not financially harm the company and is part of its long-term plans to reward investors. In a statement November 8, the company claimed it would maintain $3 billion of liquidity with $500 million in cash after the dividend was paid.
