Two Supermarket Chains Negotiate Business Merger

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Mergers & Acquisitions on Wednesday, March 28, 2012.

Navigating any type of change to the overall structure of a business can be difficult in California and elsewhere. However, this may especially be true with regards to a business merger as it involves bringing two entities together with possibly very different corporate structures. On the other hand, though, a merger can achieve greater efficiencies in the way the two companies operate, possibly resulting in higher profits for the business and lower prices for the customers.

In that vein, California readers may be interested in the merger of two natural food supermarket chains: Sprouts Farmers Market and Sunflower Farmers Market. Although neither has its headquarters located in California, they do have a growing presence within the state. On March 9, the two companies announced they would merge by the end of 2012. Together, they will operate in 139 locations and employ roughly 10,000 workers.

After the merger is over, the companies will operate as Sprouts Farmers Market and expect 2012 revenue of close to $2 billion. However, the merger is contingent on regulatory approval. If regulators decide the merger is not in the best interest of consumers or that the merger otherwise runs afoul of the law, then they may block the deal.

Understanding the laws and regulations involving a business merger will certainly be crucial for both of the supermarket chains moving forward. There are also additional legal risks involved in a merger that the companies should be aware of, such as changes to corporate structure and director liability. But as mentioned, a successful merger may bring lower costs, increased revenue and better prices for consumers.

Source: Sacramento Business Journal, "Independent grocery chains Sprouts, Sunflower plan merger," March 12, 2012

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