Colorado will lead a multi-state investigation into the proposed $25 billion merger between King Soopers’ parent company and Albertsons, which operates Safeway, Attorney General Phil Weiser announced Thursday.

Weiser has also filed a brief to block Albertsons from paying its shareholders a $4 billion dividend before regulators review the merger. The move supports a motion for preliminary injunction filed by Washington Attorney General Bob Ferguson.

Preliminary injunctions “can last for a longer period of time” than a temporary restraining order, which was already granted to Ferguson. “Our job is to enforce anti-trust laws,” Weiser said.

The proposed merger, announced in October and expected to close in early 2024, received approval from the boards of both Kroger and Albertsons. Last month, both Kroger CEO Rodney McMullen and Albertsons CEO Vivek Sankaran testified before the Senate.

McMullen vowed he wouldn’t shutter stores or lay off frontline associates if the arrangement is finalized, but plans to work with the Federal Trade Commission to divest some stores “to a viable competitor.”

“We should be concerned,” Weiser said in a Thursday news conference. “We’ll be working very closely with our friends in Washington state, where this merger is also of considerable concern.”

He wouldn’t name the other states involved in the investigation.

Weiser said Washington “took the lead on addressing the special dividend,” with an oral argument on the motion to temporarily block the $4 billion payout to investors scheduled for Friday in King County Superior Court.

In his brief, Weiser said permitting the special dividend would exhaust Albertsons’ cash reserves and deepen its debt.

“It would lessen Albertsons’ ability to compete not only during the pendency of the merger review, but also in the event that the merger is blocked and Albertsons has to continue on its own,” according to Weiser’s brief.

McMullen previously acknowledged that divestiture of some stores is on the table.

Weiser worries that the $4 billion special dividend would potentially curb Albertsons’ ability to provide routine maintenance or inventory to stores that would be part of a divestiture — and thus “poison the well” for any remedies.

He pointed to past conduct by the corporation, using the merger with Safeway in 2015 as an example. After the Federal Trade Commission forced Albertsons to sell 168 stores, regional grocer Haggen Inc., bought the bulk of them — 146.

Haggen filed a lawsuit against Albertsons soon after for “anticompetitive conduct.” The company eventually went bankrupt after paying its private equity shareholder a $20 million dividend and a $25 million loan repayment, according to Weiser’s brief. Albertsons eventually purchased the Haggen brand name, and bought back 50 of its divested locations.

“The court should view Albertsons’ proposed special dividend with great skepticism,” Weiser said. “The Haggen divestiture story provides a cautionary tale for this proposed merger.”

Weiser also plans to tour Colorado to hear from residents directly about the merger, as he fears the deal could raise costs for consumers, cut employee wages and more.

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