Earnings increase amid supermarket mergers

Planning, forming and growing a new business can be immensely satisfying. From the legal structuring process to the eventual expansion of operations, the excitement of new opportunities is often what drives success. Of course, sometimes healthy growth involves merging with or acquiring other businesses, and such complex legal transactions must be handled with great care for shareholders to continue profiting.

Investors in the supermarket industry saw good reports in the first quarter of this year, as Kroger, the largest supermarket company in the U.S., is expected to report a per-share earnings increase of 14 percent. The news comes after Kroger's $2.5 billion purchase of Harris Teeter Supermarkets in January.

For the last couple of years, Kroger has met or exceeded Wall Street earnings estimates, and more consolidation in the supermarket industry is expected. According to Reuters, the equity firm that owns the discount chain Grocery Outlet is considering a sale of the company for more than $1 billion.

Earlier this year, Kroger sought to acquire Safeway, which is the second largest supermarket chain in the U.S., but a private equity firm reportedly outbid Kroger with $9 billion. The firm plans to merge Safeway with Albertsons. 

Kroger's other brands include Ralphs and Kwik Shop. Readers in California may recall that Ralphs recently negotiated a contract with the United Food and Commercial Workers International Union. At issue were health care, retirement benefits and wages for 18,000 workers in 228 stores in Southern California.

If you are considering the sale or purchase of a business, then it is important to cover your legal bases to avoid risk and future liability. Likewise, drafting employment contracts requires careful attention to detail. You can learn more about these matters at our business law website. 

Source: Investors.com, "Kroger Could Extend String of Quarterly Profit Beats," James Detar, June 16, 2014

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