Of all the stories we have highlighted this year regarding successful mergers, it is ironic that a proposed deal that ultimately did not happen would involve tuna. Nevertheless, a recent LA Times.com report described how a proposed merger between Thai Union Group and Bumblebee Foods was called off amidst concerns about how the union would harm competition in the canned tuna market.
Thai Union Group is Thailand’s largest seafood company. But Chicken of the Sea’s operating as Thai Union’s subsidiary, is based in San Diego, just like Bumblebee Foods. So an inversion deal which would have lowered the overall company’s tax burden would likely have been limited. Indeed, the acquisition of Bumblebee would have ostensibly made Chicken of the Sea a more profitable and efficient company, but it may have crippled competition between it and the third largest tuna company, Starkist.
To that end, the United States Department of Justice noted that the companies knew, or should have known, that competition in the canned tuna industry was lacking already and that a merger between two of the largest in the industry would severely curtail much needed competition. In fact, the Justice Department released a statement indicating that consumers will be better off without the merger.
Nevertheless, the story exemplifies the need for experienced legal counsel to scrutinize potential mergers for how they may be viewed by federal regulators. After all, antitrust rules may nullify a proposed merger before it can be approved. Here, the proposed tuna merger was previously announced in December 2014.