The Supreme Court agreed with the Chancery Court that the defendants did not unlawfully eliminate appraisal rights but disagreed that the proxy disclosures were sufficient. An ongoing merger proposal between Kroger and Albertsons might feature a similar premerger dividend. The dividend would be funded with $2.5 billion of accumulated cash and borrowing of $1.5 billion. Several states attorneys general have sued to have the dividend stopped, arguing it would strip Albertsons of its ability to compete. The GGP case shows that this maneuver can be legal as long as you follow all of the other rules, including proper disclosure in the merger documents.

Source: New York Times June 14, 2023 14:47 UTC