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Albertsons proposes business merger with Safeway

There are a variety of factors that affect prices consumers pay for goods and services. One of these factors is competition in the free market in California or in any other state. The more firms competing for market share in an industry, the lower prices tend to be for consumers. This is why authorities may choose to scrutinize a large business merger, which could significantly decrease competition in a specific market.

Regulating authorities are now looking into a proposed merger between two large national grocery store chains. Albertsons is attempting to purchase its rival, Safeway, which is currently the second-largest grocery chain. Kroger Co. currently owns Pavilions and Vons, two major grocery store brands operating in Southern California. If the merger goes through, Albertsons would operate over 2,400 grocery locations, which would rival Kroger's 2,640 stores.

Safeway investors would receive $40 per share if the deal moves forward. This will also include a portion of the newly formed company at $32.50 per share. Many financial experts believe the merger would be beneficial to the market because they believe the market is already overcrowded with competing firms. Despite concerns from consumer advocates, Albertsons argues that the merger will lower prices due to the economy of scale.

However, if regulating authorities do approve the business merger proposed by the grocery store chain headquartered in California, adherence to the proper legal procedure will be essential. This includes making sure the correct legal documents are submitted to the appropriate agencies. Also, knowledge of applicable laws will help in various decision-making processes throughout the course of the merger.

Source: Los Angeles Times, Albertsons parent Cerberus is buying Safeway for more than $9 billion, Tiffany Hsu, March 6, 2014

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