Albertsons’ (NYSE:ACI) plans to distribute a special dividend of $6.85 per common share to its shareholders has to remain on hold for some more time. The Washington state court extended an existing temporary restraining order, which is keeping Albertsons from paying $4 billion in dividends. The extension is basically to give Washington state’s Attorney General an opportunity to appeal the court’s decision.
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The court also rejected the request for a preliminary injunction by the Attorney General. A preliminary injunction basically preserves the status quo of the subject matter before a final judgment is received.
The state is of the opinion that such a hefty dividend payout might affect Albertsons’ ability to compete with rivals, especially in case the merger is not successful.
Albertsons said these claims were “meritless and provides no legal basis for preventing the payment of a dividend that has been duly and unanimously approved by Albertsons Cos.’ fully informed Board of Directors.”
The dividend-blocking is related to the $24.6 billion merger agreement with Kroger (KR) announced in mid-October. The deal has raised concerns that the price of groceries might rise, competition may be stifled, and jobs can be impacted if two of the largest grocery chains come together.
Last week, the Federal Trade Commission asked Kroger for some additional information as part of the ongoing review process. Kroger continues to expect the merger to be completed in early 2024.
Is ACI a Buy Stock?
Currently, Albertsons has a Moderate Buy rating based on three Buy and six Hold recommendations. The average ACI price target of $30.78 implies 44% upside potential from current levels.
