For California companies of all sizes, mergers and acquisitions can be an important way to grow the business and expand. However, one high-profile national merger between two retail chains was suddenly cancelled in August after a previous announcement and scheduled shareholder votes. Supermarket chain Albertsons and pharmacy retailer Rite-Aid were to come together in the deal, called off the day before Rite-Aid shareholders were to vote on the proposed agreement.
After the merger announcement and prior to its cancellation, some Rite-Aid stockholders had declared doubts about the value of the deal and stated that they believed Albertsons’ management was enriching itself excessively. Other prominent investors noted their votes in opposition. Both companies are brick-and-mortar retailers with strong market positions in their geographic areas, but both are facing increasing challenges due to the rise of online sales. While pharmacy and grocery have been two of the later aspects of retail to be impacted, online delivery has been on the rise, especially after Amazon’s 2017 purchase of Whole Foods. The Amazon acquisition has indicated to many industry experts that consumers may move more and more toward online grocery shopping.
By combining Albertsons and Rite-Aid, the two companies planned to make a stronger joint operation, build their own online marketplace and represent a more powerful market force in ongoing price competitions. No reasons were officially disclosed for the cancellation of the agreement, but some speculate that negotiations to change the deal in response to shareholder objections failed.
When business owners want to improve their market share and gain access to new customers, merging with another company can be an important way forward. A business law attorney can work with a client contemplating these types of complex business transactions in order to negotiate a strong deal and develop contracts that accurately reflect the goals of the united firm.