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On Monday, the New York Times (www.nytimes.com) and several other online news publishers reported that the Federal Trade Commission (FTC) joined by Attorney General from nine (9) States sued, Kroger, a Cincinnati-based grocery giant, from acquiring the Idaho- based supermarket chains, Albertsons to the tune of $24.6 Billion. The states that joined the regulator in its federal lawsuit against Kroger are Arizona, California, Illinois, Maryland, Nevada, New Mexico, Oregon, Wyoming, and the District of Columbia.

Here is a gist of the New Your Times’ report by Julie Creswell, published on February 27, 2024.

If this merger pushes through, the regulator said this would be the largest supermarket deal in the U.S. history. The FTC argues that the merger will hurt competition in the industry and raise prices for consumers.

“This supermarket mega-merger comes as American consumers have seen the cost of groceries rise steadily over the past few years,” Henry Liu, director of the F.T.C.’s Bureau of Competition. “Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today.

FTC’s lawsuit is the latest stance by the Biden administration on mergers, similar to challenges served against several big companies in recent years such as: Amgen’s $27.8 billion acquisition of the pharmaceutical company Horizon Therapeutics; JetBlue’s proposed $3.8 billion purchase of Spirit Airlines; and Microsoft’s $70 billion acquisition of the video game maker Activision Blizzard.

Lifting from New York Times’ report, Jon Donenberg, a deputy director of President Biden’s National Economic Council, said in a statement that Mr. Biden believed that competition was key to capitalism. “When large corporations are not checked by healthy competition, they too often do not pass cost savings on to consumers and exploit their workers,” he said.

Both Kroger and Albertsons countered this move saying:

  • Kroger said in a statement that the F.T.C.’s move to block the merger would actually harm shoppers and grocery store employees.
  • Albertsons added that if the F.T.C. successfully blocked the merger, “it would be hurting customers and helping strengthen larger, multichannel retailers such as Amazon, Walmart and Costco — the very companies the F.T.C. claims to be reining in — by allowing them to continue increasing their growing dominance of the grocery industry.”
  • Both look forward to presenting the merger in court.

All things being considered, this story offers M&A professionals a treasure trove of business lessons when assessing and implementing mergers and acquisitions, such as:

  • Practice caution and due diligence, scrutinizing detailed information to avoid surprises along the way;
  • Understand regulatory, economic, and political contexts and its implications;
  • Consider broader industry implications looking beyond individual deals and adapting to changes with long-term prospects in mind, and
  • Expand and explore alternative strategies, practicing creativity and being open to innovation.

To read the article, go to: https://www.nytimes.com/2024/02/26/business/ftc-kroger-albertsons-merger.html

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