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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Easter on Apple, card Playing and

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Speaker 2: Broyd Auto with the Bloomberg Business App. Listen on demand

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Speaker 2: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 3: Let's go to another deal that we've been talking about

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Speaker 3: throughout the morning, and that's Hers. She's in Mondaliz. Mondales

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Speaker 3: makes a bit for her, She's Hershe's comes back today

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Speaker 3: and says, Nah, she's not high enough. Want to get

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Speaker 3: more on this with Diana Rosea Pina, Bloomberg Intelligence Consumer

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Speaker 3: Staples analyst. Is there a number you think that Hershe's

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Speaker 3: would be like?

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Speaker 4: Yep, Well, it really depends. Last time Mondales tried, which

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Speaker 4: was in twenty sixteen, they went up to twenty five

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Speaker 4: billion dollars with a multiple of twenty times EBITDA. Currently

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Speaker 4: Hershe's at sixteen and he was still denied. There's a

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Speaker 4: lot of hurt that Mondaliese will have to go through.

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Speaker 4: Not only the trust that owns pretty much controls eighty

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Speaker 4: percent of Hershey, but there's also the age for Pennsylvania

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Speaker 4: that has to say on it and it's likely that they.

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Speaker 3: Will deny it.

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Speaker 5: Interesting, So, have we heard anything from the trust either

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Speaker 5: now or in the past about kind of their willingness

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Speaker 5: to sell because this is a family situation.

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Speaker 4: Yeah, it's unlikely that they will want to sell. Her

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Speaker 4: reports that because cocoa is at you know, such high levels,

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Speaker 4: they might be more willing to sell. It is unlikely.

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Speaker 4: You know, ten percent of the revenue for Hershey is

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Speaker 4: in salty snacks. There's expanding into it, There's a lot

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Speaker 4: of things that they're trying to do. I don't think

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Speaker 4: necessarily that you know, a commodity is going to make

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Speaker 4: them sell. It's unlikely.

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Speaker 3: So you mentioned that Monley's made a bid bad with

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Speaker 3: twenty sixteen. Is that what you've said? Yes, So what's

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Speaker 3: the environment from twenty sixteen where you were looking at

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Speaker 3: twenty five billion dollars bid twenty five times even da right,

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Speaker 3: that's what it was valued at that versus today within

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Speaker 3: this kind of snack foods market.

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Speaker 4: Well, you know, obviously there's been a lot more acquisitions

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Speaker 4: compared to twenty sixteen. Rates might be going down in

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Speaker 4: terms of that will make it permissible. Another thing that

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Speaker 4: we think it's going to be difficult for Mandalize is

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Speaker 4: actually to finance the deal. So currently they will probably

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Speaker 4: go extending beyond six times abidad to be able to

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Speaker 4: even get closer. And last time they actually did a

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Speaker 4: fifty stock fifty percent cash. We're thinking that they're probably

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Speaker 4: came back to the same with the same proposal and

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Speaker 4: it was pretty much nigh.

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Speaker 5: What's your sense of how aggressive Mondalies may be, both

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Speaker 5: in terms of price and I don't know, maybe structure

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Speaker 5: giving the family some kind of special value or something.

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Speaker 4: Yeah, I mean it seems like they were going, uh,

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Speaker 4: they're going in a I don't want to say a

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Speaker 4: fishing expedition, but it's kinda I think they want to

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Speaker 4: be friendly. I don't think they want to be extremely aggressive.

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Speaker 4: You know, obviously they they have a relatively new CEO

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Speaker 4: compared to what they had last time, so maybe he

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Speaker 4: sees things a little bit different. Uh, the industry has

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Speaker 4: gone beyond strategic m and A and more of like

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Speaker 4: bolt on acquisitions. They do better with that because it's

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Speaker 4: easier to assimilate, it's cheaper, uh, and it's easier on

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Speaker 4: the balance sheet. So I think they're more there. I

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Speaker 4: think they will be happy if it happens, but I

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Speaker 4: don't I don't think it's going to be something that

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Speaker 4: they're gonna be pressing on.

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Speaker 3: How uh, how fractured is the snack group right now,

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Speaker 3: like how many players are in it and sort of

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Speaker 3: what's the growth rate for these guys right now.

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Speaker 4: So for confectionery, you know, if if Mandalize is successful,

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Speaker 4: then and the combined global market for the global share

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Speaker 4: for Mandalize Hershey will be about sixteen percent and twenty

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Speaker 4: seven percent in North America, So it is it is

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Speaker 4: not as fragmented as you know other other situations. You

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Speaker 4: have the snack Salty Snacks, which is sixty percent going

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Speaker 4: to PepsiCo, So it's it's it's very concentrated. I would say, all.

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Speaker 5: Right, you put in Mandales md l Z is the ticker,

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Speaker 5: and you go equity comp comp This is one of

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Speaker 5: Matt Miller's favorite functions, SHUZI that compares the stock price

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Speaker 5: of Mandaliese over the last five years average annual return

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Speaker 5: five point seven percent, the Consumer Staples Index nine point

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Speaker 5: eight percent, and the S and P five hundred over

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Speaker 5: the last five years up almost sixteen percent. So Mandalize

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Speaker 5: has been an underperformer are they just too big? Do

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Speaker 5: you think what's the bare case on Mandalize?

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Speaker 4: I think I think it has to do with how

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Speaker 4: snacks have have performed in the past a couple of years.

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Speaker 4: Also because of you know, chocolate being high. They are

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Speaker 4: actually exposed to chocolate. Obviously they have half of their

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Speaker 4: revenue comes from Oreo, which is obviously.

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Speaker 5: The revenue Mondolize comes from Oreos. Yes, wow, see there

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Speaker 5: the problem here. First, for these snack good companies, there's

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Speaker 5: more and more people like Lisa Mittelo out there. You know,

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Speaker 5: healthy food, always exercise.

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Speaker 3: Excuse me, am, I insulted. I was not included in

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Speaker 3: this list sitting right next to you. Yeah. Mostly that's

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Speaker 3: no good. But that's the point. And then you also

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Speaker 3: have the GLP one drugs numbers, all the worries that like,

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Speaker 3: oh that was going to tank food, et cetera, but

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Speaker 3: that we haven't really seen that. But if you talk

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Speaker 3: to the CEO of say Novdes like a year and

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Speaker 3: a half ago, who had been like, oh, yeah, I'm

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Speaker 3: getting calls from the snack guys for sure.

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Speaker 1: Yeah.

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Speaker 4: I mean it's it's these companies have been around for

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Speaker 4: a hundred years. They have seeing everything and last time

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Speaker 4: there was another wave of like healthy snacking. They responded

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Speaker 4: by doing what they call permissible snacking, which.

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Speaker 3: Was basically their Oreos.

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Speaker 4: Cookies in like a smaller package, which was more profitable

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Speaker 4: for them, and they will like market it as you know,

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Speaker 4: it's only one hundred calories. You can actually eat this

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Speaker 4: as a snack.

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Speaker 3: So you know the ylp.

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Speaker 4: Thread, it's it's of our vlona.

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Speaker 5: I think Eric from the back row rights and Oreos

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Speaker 5: are vegan.

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Speaker 1: Oh that I.

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Speaker 3: No, No, the cookie parts not vegan. The's no way.

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Speaker 2: I don't know.

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Speaker 5: Maybe they have a vegan version.

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Speaker 3: You're gonna have milk and eggs in there in some capacity,

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Speaker 3: you know, or unless it's you ate one like I've

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Speaker 3: eaten them. I just don't eat them. Although I did

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Speaker 3: make an Oreo pavlova for Thanksgiving that was really good,

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Speaker 3: and uh oreo with cream. It's basically it's like a

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Speaker 3: big Moraine cake with Oreos in it. Okay, and nobody

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Speaker 3: ate it. Everybody ate it. My mom and wanted to bulky.

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Speaker 3: There's like four of us, but still all right, enough

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Speaker 3: of that, Thank you very much. We appreciated Diana Dana

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Speaker 3: Pena Roseero Penya Bloomberg Intelligence.

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Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on applecar Play and Android

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Speaker 2: Auto with a Bloomberg Business at You can also listen

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Speaker 2: live on Amazon Alexa from our flagship New York station,

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Speaker 2: Just say Alexa playing Bloomberg eleven thirty.

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Speaker 3: All right, back to the economic data of the day,

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Speaker 3: You're going to take a look at CPI. So it

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Speaker 3: felt like a pretty benign read on inflation. That was

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Speaker 3: sort of the zeitgeist. After the number broke, However, the

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Speaker 3: question really becomes, then where else will we see disinflation?

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Speaker 3: Or is the stickiness of higher prices going to change

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Speaker 3: the neutral rate in that terminal rate for the Fed?

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Speaker 3: While Bill Lee is joining us one of the best

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Speaker 3: in the industry, Bill Lee, chief economists at the Milken Institute,

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Speaker 3: Hey Bill, do you think that the disinflation trend is

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Speaker 3: over for now?

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Speaker 6: Hy Alex, Well, we see the disinflation trend mainly in

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Speaker 6: goods and that seems to be continuing until perhaps we

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Speaker 6: see the tabs come in. But the key to the

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Speaker 6: inflation picture is going to be services, as you know, and.

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Speaker 7: I think most people have not realized.

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Speaker 6: That they've concentrated so much on services and housing services

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Speaker 6: they forget that services X energy X housing has been

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Speaker 6: running somewhere three and a half to three to three

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Speaker 6: quarter percent for the longest time, and that doesn't show

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Speaker 6: any sign of coming down.

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Speaker 7: And I think that's one of.

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Speaker 6: The reasons why perhaps the discontent elected President Trump, because

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Speaker 6: people are saying, I just can't make ends meet, I

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Speaker 6: might cost a living just doesn't show any signs of recovering.

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Speaker 6: And I think the reason there is because launch things

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Speaker 6: like personal services, haircuts, medical services, car insurance, use, car prices.

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Speaker 6: These are things that are still showing a lot of momentum,

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Speaker 6: and there's no sign that those are ebating. And I

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Speaker 6: think that's what the FED worried enough to say, Look,

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Speaker 6: we need to normalize, but we're going to be normalizing

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Speaker 6: at our own pace, and it's going to be determined

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Speaker 6: by what's happening the services, X housing, eccentergy, eccentergy.

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Speaker 5: So how do you think the FED will interpret today's

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Speaker 5: data as it thinks about it's December eighteenth meeting.

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Speaker 7: I think they think it's on track.

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Speaker 6: They really see that downward momentum in the in the

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Speaker 6: overall numbers and especially on the PC the flavor where

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Speaker 6: people's behavior can really adjust to relatively cheaper stuff. But

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Speaker 6: I think what they're going to say, come come January

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Speaker 6: is let's see more momentum going down. We've seen the

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Speaker 6: bulk of that from that surprising sharp rise that we

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Speaker 6: saw in February March down to the lows in July.

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Speaker 6: But since July and even financial markets have reacted that

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Speaker 6: the long term expectations, the five year breaking inflation rates

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Speaker 6: have risen from the low of like one point nine

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Speaker 6: percent up to about two and a quarter. We're realizing

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Speaker 6: that when inflation is not over yet, that this inflation

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Speaker 6: services has yet to start really significantly. And until we

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Speaker 6: start to see that, I think the FED is going

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Speaker 6: to start to slow down its normalization and kind of

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Speaker 6: recalibrate where normal.

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Speaker 3: Where normal is, So is that a cut in December,

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Speaker 3: pause in January.

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Speaker 7: January pause can be in the cards.

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Speaker 6: But the thing that's driving the FED to really lower

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Speaker 6: rates is that they're well above neutral, and neutral is

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Speaker 6: somewhere between what three and a half four percent, So

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Speaker 6: unless you see a four handle on the short term rate,

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Speaker 6: we're nowhere near that neighborhood. Are normal now maybe you

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Speaker 6: can say we don't need to get to normal that quickly,

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Speaker 6: and that's exactly what the FED is going to be

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Speaker 6: debating between now and January.

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Speaker 5: So, but when you see inflation prints like this and

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Speaker 5: kind of what we know about elevated prices for you know,

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Speaker 5: a lot of folks out there in the supermarket and

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Speaker 5: other places. What's your call on the US consumer these days?

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Speaker 6: You know, Paul, that's a great question. I strongly believe

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Speaker 6: for the longest time, even when I was back at City,

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Speaker 6: that we live in a bifurcated economy. The consumer spending

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Speaker 6: has been very strong because so many people are dipping

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Speaker 6: into savings. And where's the savings coming from is for

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Speaker 6: the asset owners, the people who own the NVIDIAs and

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Speaker 6: all the tech stocks. Well, that's only twenty percent of

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Speaker 6: the population. So what we see is that forty percent

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Speaker 6: of the bump in consumption, the growth of consumption is

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Speaker 6: accounted for it by about twenty percent of the population.

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Speaker 6: Well over sixty percent of the population is hand to

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Speaker 6: mouth and they depend upon wage income. And that's just

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Speaker 6: not high enough because even though we've had a lot

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Speaker 6: of job creation, it's in payrolls, which means people are

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Speaker 6: getting second and third jobs. We don't see it in

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Speaker 6: household surveys, which have averaged about thirty five thousand per

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Speaker 6: month over the last year. So we're not seeing a

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Speaker 6: lot of people more people being employed. We're seeing a

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Speaker 6: lot of more jobs being created. And that to me

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Speaker 6: sounds like a lot of second and third jobs just

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Speaker 6: to make ends meet. And the jobs are in the

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Speaker 6: low wage paying sectors of hospitality and healthcare and that

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Speaker 6: kind of stuff.

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Speaker 3: Some breaking news for everybody right now. Hershey's main owner

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Speaker 3: has said to reject Mandalese's offer as too low. Now,

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Speaker 3: this comes after Mondalese made a preliminary approach to acquire

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Speaker 3: Hershey that could create a food a giant of combined

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Speaker 3: sales worth almost fifty billion dollars. The deal would help

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Speaker 3: Mondalze compete with Mars. But nonetheless, it looks like Hershey's

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Speaker 3: main owner is said to reject Mondalese's offer as too low.

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Speaker 3: So we'll see there's a potential counter that comes back.

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Speaker 3: Bill when you look at your models for next year

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Speaker 3: and sort of game out, how do you think about

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Speaker 3: US policy? Right, there's there's one side and one and

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Speaker 3: one positive one negative in that you have immigration, and

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Speaker 3: you have taxes and deregulation. Where do you think sequencing

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Speaker 3: is going to be and how does that affect your

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Speaker 3: growth forecast.

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Speaker 6: That's a really interesting question because in order for the

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Speaker 6: policies that really matter for growth to take effect, and

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Speaker 6: to me, those are deregulation, a lowering energy prices, and

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Speaker 6: these pro growth agenda that present Trump is talking about

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Speaker 6: that can can take place fairly quickly in the sense

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Speaker 6: that people can be reassured that that the the the

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Speaker 6: the government is going to be very supportive of whatever

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Speaker 6: promotes growth, which means technology uh and and the mega

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Speaker 6: agenda is to create more jobs.

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Speaker 7: So even with the tariff policies.

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Speaker 6: Being announced, we know that they're going to be used

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Speaker 6: as a bargaining tool to get foreigners to invest more

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Speaker 6: capital the United States. So we expect to see capital

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Speaker 6: flows coming in, more domestic investment, more domestic job creation.

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Speaker 6: But where you're going to hire people, and you need

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Speaker 6: skilled people in order to fulfil fill these high paying jobs.

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Speaker 6: If you're going to suck in a lot of labor

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Speaker 6: into these high paying sectors, where you're going to find

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Speaker 6: people in the services sectors that are lower paying, you

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Speaker 6: need immigration for that, and I think it's going to

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Speaker 6: be tricky how the Trump administration arranges the immigration laws

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Speaker 6: in the way that allows legal low skilled workers to

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Speaker 6: stay in the United States, And that's really the key

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Speaker 6: to staining growth going forward. Will the low skilled labor

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Speaker 6: be legalized in a way that that doesn't interrupt the

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Speaker 6: flow that goes into construction and and a lot of

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Speaker 6: the entertainment and restaurant businesses that are are absorbing these

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Speaker 6: lower cost labor. So so this a long witted way

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Speaker 6: of saying the first half of the year, I expect.

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Speaker 7: To see a lot of uh.

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Speaker 6: Pent up demand for domestic investment and a lot of

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Speaker 6: investment in high tech industries. But later on in the year,

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Speaker 6: unless we see the low wage workers staying in the

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Speaker 6: United States in legal fashion, that's what we're going to

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Speaker 6: see the bottlenecks.

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Speaker 5: Hey, Bill, people come up to your cocktail parties and say,

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Speaker 5: should I be worried about deficits and the debt of

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Speaker 5: this country?

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Speaker 7: What do you say? All? You know, that's the mantra

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Speaker 7: of every economist that.

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Speaker 3: Well, first he says, why am I at this cocktail party?

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Speaker 2: Yeah?

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Speaker 3: And then the second question is.

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Speaker 6: Well, I think I think the bond market vigilantes. I

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Speaker 6: have really not been at work yet, otherwise we'd be

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Speaker 6: seeing that bear Steepener really go crazy and long end

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Speaker 6: start to rise. So, as as Cheff Paul says, we're

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Speaker 6: not at an unsustainables position right now, but surely the

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Speaker 6: path is completely unsustainable and has been unsustainable for the

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Speaker 6: last ten years.

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Speaker 7: Now.

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Speaker 6: Because it's been unsustainable for the last ten years, people say, hey, well,

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Speaker 6: I don't need to worry about it right now. And

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Speaker 6: I think until something really hits, like a default in

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Speaker 6: the US Treasury or something that gets people excited about

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Speaker 6: about what's going on in the future and future deficits

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Speaker 6: in future crying out, we're not going to see much

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Speaker 6: reaction in the bob markets.

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Speaker 7: That's it. I don't think.

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Speaker 5: I just I don't see the political will on either side.

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Speaker 3: I thing is, I think I've heard this the whole

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Speaker 3: time I've ever been in this man syet right, and

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Speaker 3: it's like it doesn't matter until it matters at the

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Speaker 3: end of the day. So can the US exceptionalism theme continue?

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Speaker 8: Then?

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Speaker 6: You know, I've been saying this in all my eighteen

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Speaker 6: years of the IMF, where people said that Bill, you know,

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Speaker 6: such an American. When you go to Paris, it's like

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Speaker 6: John Wayne walking down to the cham Zays. I am

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Speaker 6: so pro American and that always have it because that's

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Speaker 6: where capital is coming to.

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Speaker 8: You know.

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Speaker 6: The famous Lucas paradox means is that says, why is

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Speaker 6: it that advanced economies draw in capital even though they

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Speaker 6: are capital rich. It's because that's where innovation is and

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Speaker 6: the United States is the heart of innovation. So for

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Speaker 6: me going forward, unless the administration somehow screws up and

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Speaker 6: destroys the technological advantages that we have, and that's very

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Speaker 6: unlikely under President Trump, I think we see more of

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Speaker 6: the exceptionalism continuing because we're at the edge of the

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Speaker 6: leading edge of AI, we're at the leading edge of

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Speaker 6: other technologies.

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Speaker 7: The fear I have is that people are ignoring what's

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Speaker 7: going on in China.

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Speaker 6: China is determined to be our biggest competitor in these

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Speaker 6: high value outed fields, and unless we really pay attention

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Speaker 6: to what's going on there, we may lose our edge.

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Speaker 5: All right, Bill, thank you so much for joining us. Billy,

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Speaker 5: he's the chief economist at the Elkin Institute, giving us

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Speaker 5: a few minutes of his time. As we break down

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Speaker 5: this inflation data.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on Apple card playing Android

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Speaker 2: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 2: you get your podcasts, or watch us live on YouTube.

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Speaker 5: Alex Steel Paul Swiney live here in our Bloomberg in

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Speaker 5: Actor Broker Studio or streaming live on YouTube as well

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Speaker 5: to check us out there. As johns is reporting, the

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Speaker 5: economic news of the day was one of inflation. CPI

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Speaker 5: headline zero point three percent, bang in line with expectations,

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Speaker 5: a little bit higher than the prior month ex food

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Speaker 5: and energy. You know, it was also up zero point

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Speaker 5: three percent and that was in line with expectations as well.

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Speaker 5: Let's break it down with Lindsay Piegs, chief economists for Steefel. Lindsay,

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Speaker 5: what are your takeaways from this CPI report we saw

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Speaker 5: this morning?

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Speaker 8: Well, nothing overly alarming. As you mentioned, it did come

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Speaker 8: in write in line with expectations. Excuse me, But at

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Speaker 8: the same time, this does show a further lack of

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Speaker 8: disinflationary progress and this should be pretty alarming for the

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Speaker 8: Fed that had really started to focus on potential labor

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Speaker 8: market weakness as opposed to still focused on getting inflation

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Speaker 8: down to two percent. We've seen inflation not necessarily re

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Speaker 8: accelerate per se, but certainly move sideways for the past

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Speaker 8: several months, and this morning's report is no exception.

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Speaker 3: Does that mean the disinflation narrative continues or just lack

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Speaker 3: of more inflation?

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Speaker 8: Well, I think you're kind of it's two sides of

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Speaker 8: the same coin. We are still in a disinflationary environment,

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Speaker 8: but the progress of disinflation has largely stalled at this point,

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Speaker 8: making that conclusion of getting back to two percent still

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Speaker 8: somewhat of a reach for the FED. Now, again, we've

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Speaker 8: made ample progress coming down from earlier peak levels, but

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Speaker 8: this is not the time for the FED to lose

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Speaker 8: focus on that last mile getting us back to a

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Speaker 8: sustainable two percent level.

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Speaker 5: What do you think is the sticky part of that

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Speaker 5: next one undred and fifty basis points of reduction in inflation?

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Speaker 8: Well, if you look at this morning's report, the games

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Speaker 8: were widespread across a number of different categories. But when

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Speaker 8: we take a step back and we look over the

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Speaker 8: past couple of months, we see that a lot of

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Speaker 8: that sticky pressure is really on the services side. So

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Speaker 8: we see that in terms of consumers shifting their preference

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Speaker 8: away from stuff, away from electronics and goods towards services

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Speaker 8: and experience. But we also see one of the components

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Speaker 8: that remain sticky is housing. That owner's equivalent rent components

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Speaker 8: still on a year over year basis up near five percent,

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Speaker 8: And because it can holds such a sizeable portion, such

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Speaker 8: a sizable weight in the CPI or even the pc

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Speaker 8: for that matter, it's going to be very difficult for

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Speaker 8: the FED to get that headline back to two percent

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Speaker 8: without further reprieve on the shelter costs or on the

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Speaker 8: housing side of things.

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Speaker 3: What do you think the picture is going to look

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Speaker 3: like next year with question marks about tariffs in etc. Directionally,

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Speaker 3: where do you think the CPI the PPA numbers move Well?

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Speaker 8: I think that right now that's part of the motivation

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Speaker 8: of why the FED remains committed to a potential third

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Speaker 8: round reduction in December. The Committee really does want to

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Speaker 8: provide as much relief as possible before we turn the

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Speaker 8: calendar page and face a potentially more aggressive fiscal policy

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Speaker 8: agenda which could bring upside risks to inflation. Now, nothing

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Speaker 8: in the Trump administration is a foregone conclusion in terms

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Speaker 8: of inflationary pressures, but there are upside risks. Large sizable

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Speaker 8: tax cuts could be inflationary if they're not offset with

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Speaker 8: sizeable reductions in other areas of government outlays, tariffs inive themselves,

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Speaker 8: excuse me, not necessarily inflationary. But if we did see

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Speaker 8: the US engage in a back and forth tit for

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Speaker 8: tat retire he military retaliatory cycle with some of our

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Speaker 8: trading partners, that absolutely could be inflationary. So there's a

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Speaker 8: lot of upside risk, not only from international unknowns, with

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Speaker 8: domestic policy initiatives as well.

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Speaker 5: All Right, Lindsay, thank you so much for joining us.

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Speaker 5: Lindsay Pigs, a chief economist at Steve, will break it

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Speaker 5: down the CPI data.

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Speaker 2: Today, you're listening to the Bloomberg Intelligence Podcast. Catch us

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Speaker 2: live weekdays at ten am Eastern on applecard Play and

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Speaker 2: Android Auto with a Bloomberg Business app. You can also

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Speaker 2: listen live on Amazon Alexa from our flagship New York station,

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Speaker 2: Just Say Alexa Play Bloomberg eleven thirty.

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Speaker 5: Albertson's is Johns reporting Albertson sus Kroger for breach of

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Speaker 5: contract over scuttle deal what's called?

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Speaker 7: Isn't that why they made breakup?

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Speaker 1: Fish don't get it in.

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Speaker 5: Jennifer Ree joins a senior litigation analyst for Bloomberg Intelligence.

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Speaker 3: Jennifer, is it rare?

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Speaker 5: Is it common for two merger partners on a broken

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Speaker 5: deal to suit each other?

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Speaker 1: So it happens once in a while.

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Speaker 9: I'll say it's pretty rare, but it has happened. I mean,

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Speaker 9: think about anthemin Signa. I don't know if you remember

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Speaker 9: that deal from back in twenty fifteen. It fell apart also,

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Speaker 9: and there was litigation for a couple of years after

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Speaker 9: the deal was terminated in Delaware, and you know, they

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Speaker 9: both came out with nothing.

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Speaker 1: Spent a lot of money and both came out with nothing.

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Speaker 3: Is it true that you think that Kroger didn't do

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Speaker 3: enough here?

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Speaker 4: Like?

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Speaker 3: Do they have a leg to stand on Alberson?

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Speaker 9: I think a breach of contract claim based on, you know,

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Speaker 9: failing to abide by sufficiently defending against the antitrust claims

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Speaker 9: is very difficult because you know, this is really very

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Speaker 9: subjective and to some extent, when companies go to court

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Speaker 9: and they have a remedy, they're sort of rolling the dice.

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Speaker 1: They're hoping they'll convince the judge, even though they didn't

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Speaker 1: convince the FTC.

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00:22:41,800 --> 00:22:43,320
Speaker 9: And I'm not so sure that you can think of

440
00:22:43,400 --> 00:22:46,159
Speaker 9: that as a breach in this case, though, having meant

441
00:22:46,240 --> 00:22:48,920
Speaker 9: a trial, the remedy really was deficient. I mean, it

442
00:22:49,080 --> 00:22:52,119
Speaker 9: was very difficult to understand how a judge, after the

443
00:22:52,240 --> 00:22:54,960
Speaker 9: FDC presented their case on how this deal could cause

444
00:22:55,000 --> 00:22:57,760
Speaker 9: harm in thousands of markets, how a judge could accept

445
00:22:58,000 --> 00:23:00,200
Speaker 9: the remedy that had been put forward by Kroger, which

446
00:23:00,280 --> 00:23:03,840
Speaker 9: was really very piecemeal, very complicated and difficult, and didn't

447
00:23:03,880 --> 00:23:04,840
Speaker 9: really have the best buyer.

448
00:23:05,240 --> 00:23:06,879
Speaker 1: So you know, we're gonna have to see what happens

449
00:23:06,880 --> 00:23:07,240
Speaker 1: here with this.

450
00:23:07,640 --> 00:23:10,920
Speaker 5: I mean, so again, I kind of thought that's kind

451
00:23:10,960 --> 00:23:14,240
Speaker 5: of what a partially what a breakup fee kind of

452
00:23:14,400 --> 00:23:17,000
Speaker 5: covers there. I mean, if this deal doesn't go through

453
00:23:17,080 --> 00:23:20,240
Speaker 5: for whatever reason, you guys wanted to buyas youd initiated

454
00:23:20,280 --> 00:23:21,720
Speaker 5: the deal, if it doesn't go through.

455
00:23:21,800 --> 00:23:25,199
Speaker 1: Right, you got to compensate me, right, right, that's exactly right.

456
00:23:25,480 --> 00:23:27,840
Speaker 9: The seller is really has a difficult time during that

457
00:23:27,920 --> 00:23:29,760
Speaker 9: interim period, right, they lose employees.

458
00:23:29,800 --> 00:23:31,680
Speaker 1: They can always enter new supply contracts.

459
00:23:31,920 --> 00:23:34,480
Speaker 9: So this is really intended to make that seller whole,

460
00:23:34,840 --> 00:23:36,960
Speaker 9: you know, in this case, I think now Kroger's turned

461
00:23:36,960 --> 00:23:39,200
Speaker 9: around and said, no, it was it was Albertson's that

462
00:23:39,240 --> 00:23:40,600
Speaker 9: breached the contract, you know.

463
00:23:40,680 --> 00:23:42,480
Speaker 1: And of course they're probably doing that to get a

464
00:23:42,520 --> 00:23:43,479
Speaker 1: little bit of leverage here.

465
00:23:43,920 --> 00:23:46,600
Speaker 9: Maybe the hopes would be that they could settle for

466
00:23:46,720 --> 00:23:49,480
Speaker 9: something less than that six hundred million breakup fee in

467
00:23:49,640 --> 00:23:52,120
Speaker 9: order to make all the litigation go away. Maybe that's

468
00:23:52,160 --> 00:23:54,520
Speaker 9: what's happening here, just a little bit of leverage. But

469
00:23:54,880 --> 00:23:56,440
Speaker 9: you know, again, we'll have to see what happens. It

470
00:23:56,480 --> 00:23:58,480
Speaker 9: would be a shame if they continue to litigate this

471
00:23:58,960 --> 00:24:00,520
Speaker 9: and spend millions of dollars.

472
00:24:00,680 --> 00:24:01,320
Speaker 7: Good for the lawyers.

473
00:24:01,880 --> 00:24:02,240
Speaker 9: A deal.

474
00:24:02,880 --> 00:24:04,560
Speaker 3: Dumb question, is the deal really done?

475
00:24:04,800 --> 00:24:04,960
Speaker 7: Oh?

476
00:24:05,040 --> 00:24:06,640
Speaker 3: Yes, they killed for sure.

477
00:24:06,560 --> 00:24:07,000
Speaker 1: It's done.

478
00:24:07,280 --> 00:24:10,800
Speaker 9: So Albertson's is already terminated. They exercised their right under

479
00:24:10,800 --> 00:24:12,560
Speaker 9: the agreement to terminate, so it is done.

480
00:24:12,600 --> 00:24:12,960
Speaker 1: The deal.

481
00:24:13,240 --> 00:24:16,040
Speaker 9: Agreement is no longer good. So if they even wanted

482
00:24:16,119 --> 00:24:18,320
Speaker 9: to do another deal, they'd have to enter a new agreement.

483
00:24:18,880 --> 00:24:21,000
Speaker 9: And now obviously there's antagonism between the.

484
00:24:21,040 --> 00:24:22,119
Speaker 1: Companies, all right.

485
00:24:22,240 --> 00:24:25,639
Speaker 5: In your world of antitrust, What is the expectation of

486
00:24:26,560 --> 00:24:31,840
Speaker 5: change given a new administration? Given you a Republican control

487
00:24:31,920 --> 00:24:34,560
Speaker 5: House and Senate. Is there any expectation that things will

488
00:24:34,560 --> 00:24:35,119
Speaker 5: get easier?

489
00:24:35,200 --> 00:24:36,080
Speaker 7: I just saw Paul.

490
00:24:35,880 --> 00:24:39,200
Speaker 5: Taubman being he was at the Golden Siens conference and

491
00:24:39,680 --> 00:24:42,200
Speaker 5: he's shaang next year is going to be a huge

492
00:24:42,320 --> 00:24:44,399
Speaker 5: m and a year and there were hiring bankers in

493
00:24:44,480 --> 00:24:46,040
Speaker 5: anticipation of that.

494
00:24:46,880 --> 00:24:48,639
Speaker 1: He knows what he says. I think he does. I

495
00:24:48,720 --> 00:24:49,800
Speaker 1: think it will get better.

496
00:24:49,920 --> 00:24:52,119
Speaker 9: I think some of the exuberance on Wall Street is

497
00:24:52,160 --> 00:24:55,960
Speaker 9: maybe a little overdone. Okay, these huge deals between competitors

498
00:24:56,000 --> 00:24:57,920
Speaker 9: are still going to get challenged, and we have to

499
00:24:58,000 --> 00:25:01,000
Speaker 9: remember that the two Republican FDCs commissioners who will still

500
00:25:01,040 --> 00:25:04,160
Speaker 9: be there on the commission both voted yes to sue

501
00:25:04,320 --> 00:25:06,399
Speaker 9: the Tapestry could pre deal and to sue the temper

502
00:25:06,480 --> 00:25:08,879
Speaker 9: se Lely Mattress Firm deal. They both said yes we

503
00:25:09,000 --> 00:25:12,399
Speaker 9: should sue, so they are aligned in some restrects with

504
00:25:12,480 --> 00:25:14,480
Speaker 9: suing the deals that could cause harm. I do think

505
00:25:14,520 --> 00:25:16,360
Speaker 9: what we're going to see though, is an upticking deals

506
00:25:16,400 --> 00:25:17,520
Speaker 9: that can close with settlements.

507
00:25:17,760 --> 00:25:19,040
Speaker 1: We didn't have any of that in Biden.

508
00:25:19,240 --> 00:25:22,159
Speaker 9: The Biden enforcers did not want to settle deals if

509
00:25:22,200 --> 00:25:22,840
Speaker 9: the deal was bad.

510
00:25:22,920 --> 00:25:24,879
Speaker 1: They wanted to challenge the deal, and that's what they did.

511
00:25:25,160 --> 00:25:26,879
Speaker 1: I think in this case, once we have.

512
00:25:26,960 --> 00:25:29,200
Speaker 9: A majority of the FTC and new people at the DOJ,

513
00:25:29,480 --> 00:25:31,159
Speaker 9: we're going to see that list of settled deals that

514
00:25:31,240 --> 00:25:32,440
Speaker 9: then go on to close grow.

515
00:25:32,720 --> 00:25:35,200
Speaker 3: What do you make of the potential new FTC people

516
00:25:35,280 --> 00:25:35,560
Speaker 3: coming in.

517
00:25:36,080 --> 00:25:36,920
Speaker 1: Well, I'll just say this.

518
00:25:37,280 --> 00:25:41,560
Speaker 9: If Lenacon's mission was to stop consolidation and revitalize antitrust,

519
00:25:41,800 --> 00:25:44,000
Speaker 9: their mission is going to be to stop with they

520
00:25:44,080 --> 00:25:48,080
Speaker 9: perceive as censorship of conservative viewpoints by big tech platforms.

521
00:25:48,119 --> 00:25:50,440
Speaker 9: There has been a lot of talk about that, even

522
00:25:50,520 --> 00:25:53,520
Speaker 9: suggesting that there could be collusion amongst big tech platforms

523
00:25:53,560 --> 00:25:57,080
Speaker 9: to censor conservative viewpoints and that the FTC should be

524
00:25:57,200 --> 00:25:59,560
Speaker 9: going after these companies under the anti trust laws to

525
00:25:59,600 --> 00:25:59,959
Speaker 9: stop them.

526
00:26:00,080 --> 00:26:02,000
Speaker 1: And I think that's going to be a big focus.

527
00:26:02,600 --> 00:26:07,080
Speaker 5: So what's the timing there at the FTC and the DOJ.

528
00:26:08,119 --> 00:26:09,960
Speaker 5: When are the new sheriffs? If you will kind of

529
00:26:10,440 --> 00:26:11,720
Speaker 5: get in town, the.

530
00:26:11,840 --> 00:26:15,600
Speaker 1: FTC could be DOJ will be quick, these people will leave.

531
00:26:15,680 --> 00:26:18,680
Speaker 9: The appointees by Biden will leave in January, and that

532
00:26:18,800 --> 00:26:21,119
Speaker 9: is the expectation also that Lena Kon at the FTC

533
00:26:21,280 --> 00:26:24,520
Speaker 9: will leave in January as soon as Trump is inaugurated

534
00:26:24,640 --> 00:26:27,879
Speaker 9: January twenty, then Andrew Ferguson will become the chair. If

535
00:26:27,960 --> 00:26:30,520
Speaker 9: Lena Khan is still there, she'll then just become a commissioner,

536
00:26:30,720 --> 00:26:32,800
Speaker 9: but she will probably leave. And then at that point

537
00:26:32,880 --> 00:26:34,960
Speaker 9: he just has to get his new appointment mark meter

538
00:26:35,359 --> 00:26:37,120
Speaker 9: through the Senate confirmation process.

539
00:26:37,440 --> 00:26:39,720
Speaker 1: It could take a few months. He has a majority

540
00:26:39,760 --> 00:26:40,240
Speaker 1: in the Senate.

541
00:26:40,280 --> 00:26:41,639
Speaker 9: In the House, I don't think it's going to be

542
00:26:41,680 --> 00:26:43,560
Speaker 9: too difficult, So it'll be a few months, and in

543
00:26:43,600 --> 00:26:44,520
Speaker 9: the meantime it'll.

544
00:26:44,280 --> 00:26:45,399
Speaker 1: Be a two to two FTC.

545
00:26:45,560 --> 00:26:49,240
Speaker 9: Probably the DJ will change over more quickly, probably in January.

546
00:26:49,520 --> 00:26:52,200
Speaker 3: So if I'm a company and I'm interested in buying

547
00:26:52,240 --> 00:26:54,440
Speaker 3: another company, do I get on the list now? Do

548
00:26:54,560 --> 00:26:56,959
Speaker 3: I wait until all the stuff is cleared and then

549
00:26:57,000 --> 00:26:59,240
Speaker 3: I get on the waiting list to get my deal done?

550
00:26:59,320 --> 00:27:00,000
Speaker 3: Like what's my strength?

551
00:27:00,760 --> 00:27:03,000
Speaker 1: I think if you know that it has some issues.

552
00:27:03,600 --> 00:27:06,159
Speaker 9: Let's say, if we see this big chocolate deal that

553
00:27:06,200 --> 00:27:06,880
Speaker 9: I've been hearing.

554
00:27:06,720 --> 00:27:10,600
Speaker 1: About my mom, right, if you know that, uh exactly, Mondali.

555
00:27:10,359 --> 00:27:12,040
Speaker 9: Is hershey, And if you know you're probably going to

556
00:27:12,080 --> 00:27:14,520
Speaker 9: get investigated, you can go ahead and file it now

557
00:27:14,640 --> 00:27:16,800
Speaker 9: because you have eight months ahead of you and the

558
00:27:16,880 --> 00:27:18,320
Speaker 9: new people will be the decision maker.

559
00:27:18,400 --> 00:27:19,760
Speaker 1: So if you have a deal you think has no

560
00:27:19,880 --> 00:27:21,240
Speaker 1: issues and could get through in thirty.

561
00:27:21,119 --> 00:27:24,240
Speaker 9: Days, maybe you wait right because you have a greater

562
00:27:24,359 --> 00:27:26,240
Speaker 9: hope of just getting it cleared in thirty days once

563
00:27:26,320 --> 00:27:26,960
Speaker 9: the new people are in.

564
00:27:27,320 --> 00:27:30,320
Speaker 5: Do you have any pending on this mand Leze Hershey deal.

565
00:27:30,760 --> 00:27:32,639
Speaker 9: I know it sounds crazy, but I actually think they

566
00:27:32,720 --> 00:27:34,720
Speaker 9: have a shot at getting that through. I mean, really,

567
00:27:34,800 --> 00:27:37,959
Speaker 9: the only overlap is in chocolate, and the FTC has

568
00:27:38,000 --> 00:27:40,359
Speaker 9: tended to look at food markets very very narrowly, not

569
00:27:40,480 --> 00:27:43,000
Speaker 9: all chocolate, but certain kinds of chocolate, and if they

570
00:27:43,080 --> 00:27:46,520
Speaker 9: do that, those overlaps become more limited and perhaps there

571
00:27:46,560 --> 00:27:47,480
Speaker 9: are more competitors.

572
00:27:47,760 --> 00:27:49,560
Speaker 1: So I actually think that there's a shot there for

573
00:27:49,640 --> 00:27:50,560
Speaker 1: that deal, even though.

574
00:27:50,400 --> 00:27:52,920
Speaker 5: It's huge, and I do I did get some confirmation

575
00:27:53,040 --> 00:27:56,359
Speaker 5: via the Internet that Oreo cookies are in fact vegan.

576
00:27:56,480 --> 00:27:58,159
Speaker 3: Yeah, I know I would guess that's wrong, but I

577
00:27:58,280 --> 00:28:00,040
Speaker 3: know that. I mean it just because they're vegan, It

578
00:28:00,080 --> 00:28:04,240
Speaker 3: doesn't mean that they're good. It's right on her desk, okay,

579
00:28:04,720 --> 00:28:06,960
Speaker 3: But like, then, what's in it? Okay? So it's sugar?

580
00:28:07,160 --> 00:28:09,800
Speaker 3: Oh I see, Okay, it's like palm oil and flour.

581
00:28:10,240 --> 00:28:10,639
Speaker 7: I got you.

582
00:28:10,920 --> 00:28:13,080
Speaker 3: Okay, that makes sense. But it's not like, Yay, that's

583
00:28:13,160 --> 00:28:14,280
Speaker 3: good for you situation.

584
00:28:14,480 --> 00:28:14,960
Speaker 7: Okay, it's not.

585
00:28:15,040 --> 00:28:17,000
Speaker 3: I make a really good vegan chocolate cake, by the way,

586
00:28:17,160 --> 00:28:20,200
Speaker 3: you do really good. Best chocolate cake I've ever had. Okay,

587
00:28:20,280 --> 00:28:20,800
Speaker 3: super moist.

588
00:28:20,960 --> 00:28:23,080
Speaker 5: Now you have to clarify that by saying or just

589
00:28:23,200 --> 00:28:25,280
Speaker 5: qualify by saying, best vegan cake I ever.

590
00:28:25,240 --> 00:28:27,840
Speaker 3: Had, best talc cake period. But if you're also vegan,

591
00:28:27,920 --> 00:28:30,000
Speaker 3: you can also eat this cake. Just put it out.

592
00:28:30,040 --> 00:28:30,840
Speaker 1: I need that recipe.

593
00:28:31,040 --> 00:28:32,760
Speaker 3: Oh, I'll send it to you. I'm telling you it's

594
00:28:32,840 --> 00:28:35,639
Speaker 3: really really good. I hate cake and I love me

595
00:28:35,800 --> 00:28:36,120
Speaker 3: this cake.

596
00:28:36,200 --> 00:28:38,000
Speaker 5: Everything you want to know about the anti trust, we

597
00:28:38,480 --> 00:28:40,840
Speaker 5: go to Jennifer and Cake. We got to Jennifer Ee,

598
00:28:40,920 --> 00:28:44,000
Speaker 5: senior litigation analyst for Bloomberg Intelligence, joining us here in

599
00:28:44,040 --> 00:28:47,160
Speaker 5: our Bloomberg Interactive Broker studio. So tough day for the

600
00:28:47,280 --> 00:28:50,720
Speaker 5: supermarket business in terms of getting deals done. But we'll

601
00:28:50,720 --> 00:28:52,080
Speaker 5: see what happens in the chocolate business.

602
00:28:52,680 --> 00:28:54,120
Speaker 3: Yeah, we'll see what happens to chocolate business.

603
00:28:54,400 --> 00:28:59,000
Speaker 2: This is the Bloomberg Intelligence podcast, available on Apples, spottery Pie,

604
00:28:59,120 --> 00:29:02,280
Speaker 2: and anywhere else you get your podcasts. Listen live each

605
00:29:02,360 --> 00:29:05,520
Speaker 2: weekday ten am to nooon Eastern on Bloomberg dot com,

606
00:29:05,840 --> 00:29:09,200
Speaker 2: the iHeartRadio app tune In, and the Bloomberg Business app.

607
00:29:09,360 --> 00:29:12,320
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608
00:29:12,560 --> 00:29:14,360
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