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Washington court temporarily blocks Albertsons' $4 bln dividend payment

Nov 3 (Reuters) - Washington's King County court has granted a nationwide temporary restraining order, blocking grocery chain Albertsons Companies Inc's $4 billion dividend payment, State Attorney General Bob Ferguson tweeted on Thursday.

"We'll be back in court Nov. 10 seeking an injunction to keep the dividend on hold while our lawsuit continues," Ferguson said in a tweet.

Supermarket operator Kroger Co snapped up Albertsons in a $25 billion deal last month, to better compete against U.S. grocery industry leader Walmart Inc on prices.

As part of the deal, Albertsons announced a payout of a "special cash dividend" of up to $4 billion to its shareholders, funded by $2.5 billion in cash on hand and borrowing the rest, with a payment date of Nov. 7.

Ferguson filed a lawsuit on Tuesday to block Albertsons from paying dividends to shareholders before closure of its proposed merger with Kroger.

The attorneys general of Washington D.C., California and Illinois also filed a lawsuit on Wednesday in a federal court seeking to block the dividend payment alleging that the proposed dividend was in violation of federal and state antitrust laws by rendering Albertsons less able to compete effectively with other supermarkets.

They also raised concerns that it would make the retailer strapped for cash after the payout, adding that it would hamper the company's ability to price competitively and maintain staffing and staff wages and benefits.

Albertsons did not immediately respond to a Reuters request for comment. (Reporting by Rhea Binoy in Bengaluru; Editing by Rashmi Aich)

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