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A cautionary tale in major acquisitions

In a prior post, we highlighted the value that a skilled business law attorney can bring in helping companies evaluate potential mergers and acquisitions. This is because what may look promising on paper should also be evaluated in terms of how the transition will be executed and how potential growth could be compromised.

Suffice it to say, no one wants an acquisition to be a train wreck after it is executed, and the help of a skilled attorney can help in avoiding this.

A cautionary tale can be seen in how Haggen Food and Pharmacy’s filing for Chapter 11 bankruptcy protection following its purchase of 146 Albertson’s and Safeway stores. 

The petition was filed earlier this month to reportedly reduce “a portfolio of locations.”The company had already announced the closure of more than two dozen stores prior to the announcement and it is in the process of suing Albertson’s for $1 billion dollars. Haggen accuses Albertson’s of engaging in “coordinated and systematic efforts” to eliminate Haggen as a viable competitor.

It remains to be seen what will come of the lawsuit. After all, it is expected that Albertson’s will vigorously defend the allegations; especially with $1 billion at stake. As for the bankruptcy, Haggen reportedly has suitors secured to take the properties it is offering. However, but it still may have to deal with leadership issues; as one of the co-CEOs has recently left the company.

Nevertheless, the acquisition has been difficult and calls into question whether many of the issues involved could have been avoided.

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