CAZ Investments Chief Investment Officer Christopher Zook Analyzes Merger and Acquisition Deals Under Biden and Trump
The Biden-Harris administration has taken an aggressive stance in scrutinizing proposed mergers and acquisitions, resulting in several deals being blocked or paused due to regulatory action. The Federal Trade Commission (FTC) and the antitrust division at the Department of Justice (DOJ) are responsible for reviewing mergers and challenging them in court if there are concerns about the competitive impact.
Several prominent mergers have been challenged in recent years, with some being blocked by courts or abandoned by the companies involved. The FTC has blocked or challenged deals worth billions of dollars, including the proposed merger between Albertsons and Kroger, the tie-up between Capri and Tapestry, and the acquisition of Amedisys by UnitedHealth Group.
Albertsons and Kroger abandoned their proposed $25 billion merger after the FTC and state legal authorities prevailed in lawsuits brought against the deal. The companies had planned to divest more than 500 stores to C&S Wholesale Grocers to address concerns about the competitive impact on the grocery industry.
Capri and Tapestry terminated their merger in November after a judge ruled that their tie-up would undermine competition in the luxury handbag and accessories space. The ruling rejected the argument made by the companies that handbags are nonessential goods that are price-sensitive to consumer preferences.
JetBlue and Spirit terminated their merger in March after determining it was the “best path forward” when it became clear the two airlines were unlikely to receive legal and regulatory approvals by their July deadline for the deal to conclude. The two companies had envisioned the merger as a way of creating a national low-fare competitor to the so-called Big Four airlines.
The FTC is also suing to block the $4 billion merger of Tempur Sealy and Mattress Firm, citing concerns about the competitive impact on the industry and prices facing consumers. The companies have argued that the bedding industry is “highly competitive” and that the merger would enhance competition, rather than undermining it.
The DOJ is also challenging UnitedHealth Group’s proposed $3.3 billion acquisition of Amedisys, a home health company that provides hospice services. The agency argues that the deal would eliminate competition in the home health and hospice industry, hurting patients, insurers, and nurses in the process.
