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Frito-Lay Investigations : 04/21/1996: Memorandum

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Memorandum COPYSIZE> MB 4/28/96


U.S. Department of Justice Seal

Subject: Frito-Lay's Proposed Acquisition of Assets of Eagle Snacks, Inc.: Recommendation to Close Investigation Date: April 21, 1996

To: J. Robert Kramer, II, Chief
Willie Hudgins, Asst Chief
Litigation II Section
From: Patricia G. Chick
Joel A. Christie
Attorneys, Litigation II

Closed 4/26/96 per CKRobinson/emg

For the reasons discussed below, we recommend that the Division close the captioned investigation [REDACTED TEXT]


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.


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]


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.



Updated June 25, 2015

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