U.S. Department
of Justice
Frito-Lay Investigations : 04/21/1996: Memorandum
| |
Closed 4/26/96 per CKRobinson/emg For the reasons discussed below, we recommend that the Division close the captioned investigation [REDACTED TEXT] Background On February 7, 1996, Annheuser-Busch announced that it was closing down its Eagle Snacks business and selling four of the ESI plants to Frito-Lay, the company that had been its number one competitor. [REDACTED TEXT] Eagle Snacks was, until the February 7th announcement, the second largest seller of salty snacks in the U.S., and the only national brand other than Frito-Lay. It was a money loser for each of the years that it was in business, and had been publicly on the block since October of 1995. Had A-B sold the business as an ongoing concern to a purchaser who would continue to operate it as a national brand, Frito-lay would have faced continued competition from Eagle. When A-B instead closed the business down, and sold four of the company's plants to Frito-Lay, that company's competitive posture changed dramatically. On March 8, 1996, [REDACTED TEXT] Investigation We interviewed officials of both companies, obtained documents from and interviewed at length the investment bankers hired to sell ESI (Goldman- Sachs), [REDACTED TEXT (b7D)] [REDACTED TEXT (b)(5), (b)(4)]It than publicly announed that the business was for sale, and retained Goldman-Sachs [REDACTED TEXT] [REDACTED TEXT (b)(5),(b)(4)] Recent Developments On April 12, 1996, A-B reached an agreement to sell the Eagle brand name to Proctor & Gamble for $5 million cash up front and a number of other contingent payments, total value estimated to be $11 million. [REDACTED TEXT (b)(5)] The other recent development that has come to our attention is that Joseph Alioto, a private antitrust attorney in California, is intending to file a private suit on behalf of a number of Eagle distributors to enjoin the transaction. While we do not know the exact timetable this may be imminent. We have talked to Alioto, who believes A-B had an obligation to offer ESI piecemeal, but does not have any clients that he was prepared to say were interested in buying all or any part of it. Conclusion [REDACTED TEXT] |
