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Speaker 3: Let's go to another deal that we've been talking about
Speaker 3: throughout the morning, and that's Hers. She's in Mondaliz. Mondales
Speaker 3: makes a bit for her, She's Hershe's comes back today
Speaker 3: and says, Nah, she's not high enough. Want to get
Speaker 3: more on this with Diana Rosea Pina, Bloomberg Intelligence Consumer
Speaker 3: Staples analyst. Is there a number you think that Hershe's
Speaker 3: would be like?
Speaker 4: Yep, Well, it really depends. Last time Mondales tried, which
Speaker 4: was in twenty sixteen, they went up to twenty five
Speaker 4: billion dollars with a multiple of twenty times EBITDA. Currently
Speaker 4: Hershe's at sixteen and he was still denied. There's a
Speaker 4: lot of hurt that Mondaliese will have to go through.
Speaker 4: Not only the trust that owns pretty much controls eighty
Speaker 4: percent of Hershey, but there's also the age for Pennsylvania
Speaker 4: that has to say on it and it's likely that they.
Speaker 3: Will deny it.
Speaker 5: Interesting, So, have we heard anything from the trust either
Speaker 5: now or in the past about kind of their willingness
Speaker 5: to sell because this is a family situation.
Speaker 4: Yeah, it's unlikely that they will want to sell. Her
Speaker 4: reports that because cocoa is at you know, such high levels,
Speaker 4: they might be more willing to sell. It is unlikely.
Speaker 4: You know, ten percent of the revenue for Hershey is
Speaker 4: in salty snacks. There's expanding into it, There's a lot
Speaker 4: of things that they're trying to do. I don't think
Speaker 4: necessarily that you know, a commodity is going to make
Speaker 4: them sell. It's unlikely.
Speaker 3: So you mentioned that Monley's made a bid bad with
Speaker 3: twenty sixteen. Is that what you've said? Yes, So what's
Speaker 3: the environment from twenty sixteen where you were looking at
Speaker 3: twenty five billion dollars bid twenty five times even da right,
Speaker 3: that's what it was valued at that versus today within
Speaker 3: this kind of snack foods market.
Speaker 4: Well, you know, obviously there's been a lot more acquisitions
Speaker 4: compared to twenty sixteen. Rates might be going down in
Speaker 4: terms of that will make it permissible. Another thing that
Speaker 4: we think it's going to be difficult for Mandalize is
Speaker 4: actually to finance the deal. So currently they will probably
Speaker 4: go extending beyond six times abidad to be able to
Speaker 4: even get closer. And last time they actually did a
Speaker 4: fifty stock fifty percent cash. We're thinking that they're probably
Speaker 4: came back to the same with the same proposal and
Speaker 4: it was pretty much nigh.
Speaker 5: What's your sense of how aggressive Mondalies may be, both
Speaker 5: in terms of price and I don't know, maybe structure
Speaker 5: giving the family some kind of special value or something.
Speaker 4: Yeah, I mean it seems like they were going, uh,
Speaker 4: they're going in a I don't want to say a
Speaker 4: fishing expedition, but it's kinda I think they want to
Speaker 4: be friendly. I don't think they want to be extremely aggressive.
Speaker 4: You know, obviously they they have a relatively new CEO
Speaker 4: compared to what they had last time, so maybe he
Speaker 4: sees things a little bit different. Uh, the industry has
Speaker 4: gone beyond strategic m and A and more of like
Speaker 4: bolt on acquisitions. They do better with that because it's
Speaker 4: easier to assimilate, it's cheaper, uh, and it's easier on
Speaker 4: the balance sheet. So I think they're more there. I
Speaker 4: think they will be happy if it happens, but I
Speaker 4: don't I don't think it's going to be something that
Speaker 4: they're gonna be pressing on.
Speaker 3: How uh, how fractured is the snack group right now,
Speaker 3: like how many players are in it and sort of
Speaker 3: what's the growth rate for these guys right now.
Speaker 4: So for confectionery, you know, if if Mandalize is successful,
Speaker 4: then and the combined global market for the global share
Speaker 4: for Mandalize Hershey will be about sixteen percent and twenty
Speaker 4: seven percent in North America, So it is it is
Speaker 4: not as fragmented as you know other other situations. You
Speaker 4: have the snack Salty Snacks, which is sixty percent going
Speaker 4: to PepsiCo, So it's it's it's very concentrated. I would say, all.
Speaker 5: Right, you put in Mandales md l Z is the ticker,
Speaker 5: and you go equity comp comp This is one of
Speaker 5: Matt Miller's favorite functions, SHUZI that compares the stock price
Speaker 5: of Mandaliese over the last five years average annual return
Speaker 5: five point seven percent, the Consumer Staples Index nine point
Speaker 5: eight percent, and the S and P five hundred over
Speaker 5: the last five years up almost sixteen percent. So Mandalize
Speaker 5: has been an underperformer are they just too big? Do
Speaker 5: you think what's the bare case on Mandalize?
Speaker 4: I think I think it has to do with how
Speaker 4: snacks have have performed in the past a couple of years.
Speaker 4: Also because of you know, chocolate being high. They are
Speaker 4: actually exposed to chocolate. Obviously they have half of their
Speaker 4: revenue comes from Oreo, which is obviously.
Speaker 5: The revenue Mondolize comes from Oreos. Yes, wow, see there
Speaker 5: the problem here. First, for these snack good companies, there's
Speaker 5: more and more people like Lisa Mittelo out there. You know,
Speaker 5: healthy food, always exercise.
Speaker 3: Excuse me, am, I insulted. I was not included in
Speaker 3: this list sitting right next to you. Yeah. Mostly that's
Speaker 3: no good. But that's the point. And then you also
Speaker 3: have the GLP one drugs numbers, all the worries that like,
Speaker 3: oh that was going to tank food, et cetera, but
Speaker 3: that we haven't really seen that. But if you talk
Speaker 3: to the CEO of say Novdes like a year and
Speaker 3: a half ago, who had been like, oh, yeah, I'm
Speaker 3: getting calls from the snack guys for sure.
Speaker 1: Yeah.
Speaker 4: I mean it's it's these companies have been around for
Speaker 4: a hundred years. They have seeing everything and last time
Speaker 4: there was another wave of like healthy snacking. They responded
Speaker 4: by doing what they call permissible snacking, which.
Speaker 3: Was basically their Oreos.
Speaker 4: Cookies in like a smaller package, which was more profitable
Speaker 4: for them, and they will like market it as you know,
Speaker 4: it's only one hundred calories. You can actually eat this
Speaker 4: as a snack.
Speaker 3: So you know the ylp.
Speaker 4: Thread, it's it's of our vlona.
Speaker 5: I think Eric from the back row rights and Oreos
Speaker 5: are vegan.
Speaker 1: Oh that I.
Speaker 3: No, No, the cookie parts not vegan. The's no way.
Speaker 2: I don't know.
Speaker 5: Maybe they have a vegan version.
Speaker 3: You're gonna have milk and eggs in there in some capacity,
Speaker 3: you know, or unless it's you ate one like I've
Speaker 3: eaten them. I just don't eat them. Although I did
Speaker 3: make an Oreo pavlova for Thanksgiving that was really good,
Speaker 3: and uh oreo with cream. It's basically it's like a
Speaker 3: big Moraine cake with Oreos in it. Okay, and nobody
Speaker 3: ate it. Everybody ate it. My mom and wanted to bulky.
Speaker 3: There's like four of us, but still all right, enough
Speaker 3: of that, Thank you very much. We appreciated Diana Dana
Speaker 3: Pena Roseero Penya Bloomberg Intelligence.
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Speaker 3: All right, back to the economic data of the day,
Speaker 3: You're going to take a look at CPI. So it
Speaker 3: felt like a pretty benign read on inflation. That was
Speaker 3: sort of the zeitgeist. After the number broke, However, the
Speaker 3: question really becomes, then where else will we see disinflation?
Speaker 3: Or is the stickiness of higher prices going to change
Speaker 3: the neutral rate in that terminal rate for the Fed?
Speaker 3: While Bill Lee is joining us one of the best
Speaker 3: in the industry, Bill Lee, chief economists at the Milken Institute,
Speaker 3: Hey Bill, do you think that the disinflation trend is
Speaker 3: over for now?
Speaker 6: Hy Alex, Well, we see the disinflation trend mainly in
Speaker 6: goods and that seems to be continuing until perhaps we
Speaker 6: see the tabs come in. But the key to the
Speaker 6: inflation picture is going to be services, as you know, and.
Speaker 7: I think most people have not realized.
Speaker 6: That they've concentrated so much on services and housing services
Speaker 6: they forget that services X energy X housing has been
Speaker 6: running somewhere three and a half to three to three
Speaker 6: quarter percent for the longest time, and that doesn't show
Speaker 6: any sign of coming down.
Speaker 7: And I think that's one of.
Speaker 6: The reasons why perhaps the discontent elected President Trump, because
Speaker 6: people are saying, I just can't make ends meet, I
Speaker 6: might cost a living just doesn't show any signs of recovering.
Speaker 6: And I think the reason there is because launch things
Speaker 6: like personal services, haircuts, medical services, car insurance, use, car prices.
Speaker 6: These are things that are still showing a lot of momentum,
Speaker 6: and there's no sign that those are ebating. And I
Speaker 6: think that's what the FED worried enough to say, Look,
Speaker 6: we need to normalize, but we're going to be normalizing
Speaker 6: at our own pace, and it's going to be determined
Speaker 6: by what's happening the services, X housing, eccentergy, eccentergy.
Speaker 5: So how do you think the FED will interpret today's
Speaker 5: data as it thinks about it's December eighteenth meeting.
Speaker 7: I think they think it's on track.
Speaker 6: They really see that downward momentum in the in the
Speaker 6: overall numbers and especially on the PC the flavor where
Speaker 6: people's behavior can really adjust to relatively cheaper stuff. But
Speaker 6: I think what they're going to say, come come January
Speaker 6: is let's see more momentum going down. We've seen the
Speaker 6: bulk of that from that surprising sharp rise that we
Speaker 6: saw in February March down to the lows in July.
Speaker 6: But since July and even financial markets have reacted that
Speaker 6: the long term expectations, the five year breaking inflation rates
Speaker 6: have risen from the low of like one point nine
Speaker 6: percent up to about two and a quarter. We're realizing
Speaker 6: that when inflation is not over yet, that this inflation
Speaker 6: services has yet to start really significantly. And until we
Speaker 6: start to see that, I think the FED is going
Speaker 6: to start to slow down its normalization and kind of
Speaker 6: recalibrate where normal.
Speaker 3: Where normal is, So is that a cut in December,
Speaker 3: pause in January.
Speaker 7: January pause can be in the cards.
Speaker 6: But the thing that's driving the FED to really lower
Speaker 6: rates is that they're well above neutral, and neutral is
Speaker 6: somewhere between what three and a half four percent, So
Speaker 6: unless you see a four handle on the short term rate,
Speaker 6: we're nowhere near that neighborhood. Are normal now maybe you
Speaker 6: can say we don't need to get to normal that quickly,
Speaker 6: and that's exactly what the FED is going to be
Speaker 6: debating between now and January.
Speaker 5: So, but when you see inflation prints like this and
Speaker 5: kind of what we know about elevated prices for you know,
Speaker 5: a lot of folks out there in the supermarket and
Speaker 5: other places. What's your call on the US consumer these days?
Speaker 6: You know, Paul, that's a great question. I strongly believe
Speaker 6: for the longest time, even when I was back at City,
Speaker 6: that we live in a bifurcated economy. The consumer spending
Speaker 6: has been very strong because so many people are dipping
Speaker 6: into savings. And where's the savings coming from is for
Speaker 6: the asset owners, the people who own the NVIDIAs and
Speaker 6: all the tech stocks. Well, that's only twenty percent of
Speaker 6: the population. So what we see is that forty percent
Speaker 6: of the bump in consumption, the growth of consumption is
Speaker 6: accounted for it by about twenty percent of the population.
Speaker 6: Well over sixty percent of the population is hand to
Speaker 6: mouth and they depend upon wage income. And that's just
Speaker 6: not high enough because even though we've had a lot
Speaker 6: of job creation, it's in payrolls, which means people are
Speaker 6: getting second and third jobs. We don't see it in
Speaker 6: household surveys, which have averaged about thirty five thousand per
Speaker 6: month over the last year. So we're not seeing a
Speaker 6: lot of people more people being employed. We're seeing a
Speaker 6: lot of more jobs being created. And that to me
Speaker 6: sounds like a lot of second and third jobs just
Speaker 6: to make ends meet. And the jobs are in the
Speaker 6: low wage paying sectors of hospitality and healthcare and that
Speaker 6: kind of stuff.
Speaker 3: Some breaking news for everybody right now. Hershey's main owner
Speaker 3: has said to reject Mandalese's offer as too low. Now,
Speaker 3: this comes after Mondalese made a preliminary approach to acquire
Speaker 3: Hershey that could create a food a giant of combined
Speaker 3: sales worth almost fifty billion dollars. The deal would help
Speaker 3: Mondalze compete with Mars. But nonetheless, it looks like Hershey's
Speaker 3: main owner is said to reject Mondalese's offer as too low.
Speaker 3: So we'll see there's a potential counter that comes back.
Speaker 3: Bill when you look at your models for next year
Speaker 3: and sort of game out, how do you think about
Speaker 3: US policy? Right, there's there's one side and one and
Speaker 3: one positive one negative in that you have immigration, and
Speaker 3: you have taxes and deregulation. Where do you think sequencing
Speaker 3: is going to be and how does that affect your
Speaker 3: growth forecast.
Speaker 6: That's a really interesting question because in order for the
Speaker 6: policies that really matter for growth to take effect, and
Speaker 6: to me, those are deregulation, a lowering energy prices, and
Speaker 6: these pro growth agenda that present Trump is talking about
Speaker 6: that can can take place fairly quickly in the sense
Speaker 6: that people can be reassured that that the the the
Speaker 6: the government is going to be very supportive of whatever
Speaker 6: promotes growth, which means technology uh and and the mega
Speaker 6: agenda is to create more jobs.
Speaker 7: So even with the tariff policies.
Speaker 6: Being announced, we know that they're going to be used
Speaker 6: as a bargaining tool to get foreigners to invest more
Speaker 6: capital the United States. So we expect to see capital
Speaker 6: flows coming in, more domestic investment, more domestic job creation.
Speaker 6: But where you're going to hire people, and you need
Speaker 6: skilled people in order to fulfil fill these high paying jobs.
Speaker 6: If you're going to suck in a lot of labor
Speaker 6: into these high paying sectors, where you're going to find
Speaker 6: people in the services sectors that are lower paying, you
Speaker 6: need immigration for that, and I think it's going to
Speaker 6: be tricky how the Trump administration arranges the immigration laws
Speaker 6: in the way that allows legal low skilled workers to
Speaker 6: stay in the United States, And that's really the key
Speaker 6: to staining growth going forward. Will the low skilled labor
Speaker 6: be legalized in a way that that doesn't interrupt the
Speaker 6: flow that goes into construction and and a lot of
Speaker 6: the entertainment and restaurant businesses that are are absorbing these
Speaker 6: lower cost labor. So so this a long witted way
Speaker 6: of saying the first half of the year, I expect.
Speaker 7: To see a lot of uh.
Speaker 6: Pent up demand for domestic investment and a lot of
Speaker 6: investment in high tech industries. But later on in the year,
Speaker 6: unless we see the low wage workers staying in the
Speaker 6: United States in legal fashion, that's what we're going to
Speaker 6: see the bottlenecks.
Speaker 5: Hey, Bill, people come up to your cocktail parties and say,
Speaker 5: should I be worried about deficits and the debt of
Speaker 5: this country?
Speaker 7: What do you say? All? You know, that's the mantra
Speaker 7: of every economist that.
Speaker 3: Well, first he says, why am I at this cocktail party?
Speaker 2: Yeah?
Speaker 3: And then the second question is.
Speaker 6: Well, I think I think the bond market vigilantes. I
Speaker 6: have really not been at work yet, otherwise we'd be
Speaker 6: seeing that bear Steepener really go crazy and long end
Speaker 6: start to rise. So, as as Cheff Paul says, we're
Speaker 6: not at an unsustainables position right now, but surely the
Speaker 6: path is completely unsustainable and has been unsustainable for the
Speaker 6: last ten years.
Speaker 7: Now.
Speaker 6: Because it's been unsustainable for the last ten years, people say, hey, well,
Speaker 6: I don't need to worry about it right now. And
Speaker 6: I think until something really hits, like a default in
Speaker 6: the US Treasury or something that gets people excited about
Speaker 6: about what's going on in the future and future deficits
Speaker 6: in future crying out, we're not going to see much
Speaker 6: reaction in the bob markets.
Speaker 7: That's it. I don't think.
Speaker 5: I just I don't see the political will on either side.
Speaker 3: I thing is, I think I've heard this the whole
Speaker 3: time I've ever been in this man syet right, and
Speaker 3: it's like it doesn't matter until it matters at the
Speaker 3: end of the day. So can the US exceptionalism theme continue?
Speaker 8: Then?
Speaker 6: You know, I've been saying this in all my eighteen
Speaker 6: years of the IMF, where people said that Bill, you know,
Speaker 6: such an American. When you go to Paris, it's like
Speaker 6: John Wayne walking down to the cham Zays. I am
Speaker 6: so pro American and that always have it because that's
Speaker 6: where capital is coming to.
Speaker 8: You know.
Speaker 6: The famous Lucas paradox means is that says, why is
Speaker 6: it that advanced economies draw in capital even though they
Speaker 6: are capital rich. It's because that's where innovation is and
Speaker 6: the United States is the heart of innovation. So for
Speaker 6: me going forward, unless the administration somehow screws up and
Speaker 6: destroys the technological advantages that we have, and that's very
Speaker 6: unlikely under President Trump, I think we see more of
Speaker 6: the exceptionalism continuing because we're at the edge of the
Speaker 6: leading edge of AI, we're at the leading edge of
Speaker 6: other technologies.
Speaker 7: The fear I have is that people are ignoring what's
Speaker 7: going on in China.
Speaker 6: China is determined to be our biggest competitor in these
Speaker 6: high value outed fields, and unless we really pay attention
Speaker 6: to what's going on there, we may lose our edge.
Speaker 5: All right, Bill, thank you so much for joining us. Billy,
Speaker 5: he's the chief economist at the Elkin Institute, giving us
Speaker 5: a few minutes of his time. As we break down
Speaker 5: this inflation data.
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 2: you get your podcasts, or watch us live on YouTube.
Speaker 5: Alex Steel Paul Swiney live here in our Bloomberg in
Speaker 5: Actor Broker Studio or streaming live on YouTube as well
Speaker 5: to check us out there. As johns is reporting, the
Speaker 5: economic news of the day was one of inflation. CPI
Speaker 5: headline zero point three percent, bang in line with expectations,
Speaker 5: a little bit higher than the prior month ex food
Speaker 5: and energy. You know, it was also up zero point
Speaker 5: three percent and that was in line with expectations as well.
Speaker 5: Let's break it down with Lindsay Piegs, chief economists for Steefel. Lindsay,
Speaker 5: what are your takeaways from this CPI report we saw
Speaker 5: this morning?
Speaker 8: Well, nothing overly alarming. As you mentioned, it did come
Speaker 8: in write in line with expectations. Excuse me, But at
Speaker 8: the same time, this does show a further lack of
Speaker 8: disinflationary progress and this should be pretty alarming for the
Speaker 8: Fed that had really started to focus on potential labor
Speaker 8: market weakness as opposed to still focused on getting inflation
Speaker 8: down to two percent. We've seen inflation not necessarily re
Speaker 8: accelerate per se, but certainly move sideways for the past
Speaker 8: several months, and this morning's report is no exception.
Speaker 3: Does that mean the disinflation narrative continues or just lack
Speaker 3: of more inflation?
Speaker 8: Well, I think you're kind of it's two sides of
Speaker 8: the same coin. We are still in a disinflationary environment,
Speaker 8: but the progress of disinflation has largely stalled at this point,
Speaker 8: making that conclusion of getting back to two percent still
Speaker 8: somewhat of a reach for the FED. Now, again, we've
Speaker 8: made ample progress coming down from earlier peak levels, but
Speaker 8: this is not the time for the FED to lose
Speaker 8: focus on that last mile getting us back to a
Speaker 8: sustainable two percent level.
Speaker 5: What do you think is the sticky part of that
Speaker 5: next one undred and fifty basis points of reduction in inflation?
Speaker 8: Well, if you look at this morning's report, the games
Speaker 8: were widespread across a number of different categories. But when
Speaker 8: we take a step back and we look over the
Speaker 8: past couple of months, we see that a lot of
Speaker 8: that sticky pressure is really on the services side. So
Speaker 8: we see that in terms of consumers shifting their preference
Speaker 8: away from stuff, away from electronics and goods towards services
Speaker 8: and experience. But we also see one of the components
Speaker 8: that remain sticky is housing. That owner's equivalent rent components
Speaker 8: still on a year over year basis up near five percent,
Speaker 8: And because it can holds such a sizeable portion, such
Speaker 8: a sizable weight in the CPI or even the pc
Speaker 8: for that matter, it's going to be very difficult for
Speaker 8: the FED to get that headline back to two percent
Speaker 8: without further reprieve on the shelter costs or on the
Speaker 8: housing side of things.
Speaker 3: What do you think the picture is going to look
Speaker 3: like next year with question marks about tariffs in etc. Directionally,
Speaker 3: where do you think the CPI the PPA numbers move Well?
Speaker 8: I think that right now that's part of the motivation
Speaker 8: of why the FED remains committed to a potential third
Speaker 8: round reduction in December. The Committee really does want to
Speaker 8: provide as much relief as possible before we turn the
Speaker 8: calendar page and face a potentially more aggressive fiscal policy
Speaker 8: agenda which could bring upside risks to inflation. Now, nothing
Speaker 8: in the Trump administration is a foregone conclusion in terms
Speaker 8: of inflationary pressures, but there are upside risks. Large sizable
Speaker 8: tax cuts could be inflationary if they're not offset with
Speaker 8: sizeable reductions in other areas of government outlays, tariffs inive themselves,
Speaker 8: excuse me, not necessarily inflationary. But if we did see
Speaker 8: the US engage in a back and forth tit for
Speaker 8: tat retire he military retaliatory cycle with some of our
Speaker 8: trading partners, that absolutely could be inflationary. So there's a
Speaker 8: lot of upside risk, not only from international unknowns, with
Speaker 8: domestic policy initiatives as well.
Speaker 5: All Right, Lindsay, thank you so much for joining us.
Speaker 5: Lindsay Pigs, a chief economist at Steve, will break it
Speaker 5: down the CPI data.
Speaker 2: Today, you're listening to the Bloomberg Intelligence Podcast. Catch us
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Speaker 2: Just Say Alexa Play Bloomberg eleven thirty.
Speaker 5: Albertson's is Johns reporting Albertson sus Kroger for breach of
Speaker 5: contract over scuttle deal what's called?
Speaker 7: Isn't that why they made breakup?
Speaker 1: Fish don't get it in.
Speaker 5: Jennifer Ree joins a senior litigation analyst for Bloomberg Intelligence.
Speaker 3: Jennifer, is it rare?
Speaker 5: Is it common for two merger partners on a broken
Speaker 5: deal to suit each other?
Speaker 1: So it happens once in a while.
Speaker 9: I'll say it's pretty rare, but it has happened. I mean,
Speaker 9: think about anthemin Signa. I don't know if you remember
Speaker 9: that deal from back in twenty fifteen. It fell apart also,
Speaker 9: and there was litigation for a couple of years after
Speaker 9: the deal was terminated in Delaware, and you know, they
Speaker 9: both came out with nothing.
Speaker 1: Spent a lot of money and both came out with nothing.
Speaker 3: Is it true that you think that Kroger didn't do
Speaker 3: enough here?
Speaker 4: Like?
Speaker 3: Do they have a leg to stand on Alberson?
Speaker 9: I think a breach of contract claim based on, you know,
Speaker 9: failing to abide by sufficiently defending against the antitrust claims
Speaker 9: is very difficult because you know, this is really very
Speaker 9: subjective and to some extent, when companies go to court
Speaker 9: and they have a remedy, they're sort of rolling the dice.
Speaker 1: They're hoping they'll convince the judge, even though they didn't
Speaker 1: convince the FTC.
Speaker 9: And I'm not so sure that you can think of
Speaker 9: that as a breach in this case, though, having meant
Speaker 9: a trial, the remedy really was deficient. I mean, it
Speaker 9: was very difficult to understand how a judge, after the
Speaker 9: FDC presented their case on how this deal could cause
Speaker 9: harm in thousands of markets, how a judge could accept
Speaker 9: the remedy that had been put forward by Kroger, which
Speaker 9: was really very piecemeal, very complicated and difficult, and didn't
Speaker 9: really have the best buyer.
Speaker 1: So you know, we're gonna have to see what happens
Speaker 1: here with this.
Speaker 5: I mean, so again, I kind of thought that's kind
Speaker 5: of what a partially what a breakup fee kind of
Speaker 5: covers there. I mean, if this deal doesn't go through
Speaker 5: for whatever reason, you guys wanted to buyas youd initiated
Speaker 5: the deal, if it doesn't go through.
Speaker 1: Right, you got to compensate me, right, right, that's exactly right.
Speaker 9: The seller is really has a difficult time during that
Speaker 9: interim period, right, they lose employees.
Speaker 1: They can always enter new supply contracts.
Speaker 9: So this is really intended to make that seller whole,
Speaker 9: you know, in this case, I think now Kroger's turned
Speaker 9: around and said, no, it was it was Albertson's that
Speaker 9: breached the contract, you know.
Speaker 1: And of course they're probably doing that to get a
Speaker 1: little bit of leverage here.
Speaker 9: Maybe the hopes would be that they could settle for
Speaker 9: something less than that six hundred million breakup fee in
Speaker 9: order to make all the litigation go away. Maybe that's
Speaker 9: what's happening here, just a little bit of leverage. But
Speaker 9: you know, again, we'll have to see what happens. It
Speaker 9: would be a shame if they continue to litigate this
Speaker 9: and spend millions of dollars.
Speaker 7: Good for the lawyers.
Speaker 9: A deal.
Speaker 3: Dumb question, is the deal really done?
Speaker 7: Oh?
Speaker 3: Yes, they killed for sure.
Speaker 1: It's done.
Speaker 9: So Albertson's is already terminated. They exercised their right under
Speaker 9: the agreement to terminate, so it is done.
Speaker 1: The deal.
Speaker 9: Agreement is no longer good. So if they even wanted
Speaker 9: to do another deal, they'd have to enter a new agreement.
Speaker 9: And now obviously there's antagonism between the.
Speaker 1: Companies, all right.
Speaker 5: In your world of antitrust, What is the expectation of
Speaker 5: change given a new administration? Given you a Republican control
Speaker 5: House and Senate. Is there any expectation that things will
Speaker 5: get easier?
Speaker 7: I just saw Paul.
Speaker 5: Taubman being he was at the Golden Siens conference and
Speaker 5: he's shaang next year is going to be a huge
Speaker 5: m and a year and there were hiring bankers in
Speaker 5: anticipation of that.
Speaker 1: He knows what he says. I think he does. I
Speaker 1: think it will get better.
Speaker 9: I think some of the exuberance on Wall Street is
Speaker 9: maybe a little overdone. Okay, these huge deals between competitors
Speaker 9: are still going to get challenged, and we have to
Speaker 9: remember that the two Republican FDCs commissioners who will still
Speaker 9: be there on the commission both voted yes to sue
Speaker 9: the Tapestry could pre deal and to sue the temper
Speaker 9: se Lely Mattress Firm deal. They both said yes we
Speaker 9: should sue, so they are aligned in some restrects with
Speaker 9: suing the deals that could cause harm. I do think
Speaker 9: what we're going to see though, is an upticking deals
Speaker 9: that can close with settlements.
Speaker 1: We didn't have any of that in Biden.
Speaker 9: The Biden enforcers did not want to settle deals if
Speaker 9: the deal was bad.
Speaker 1: They wanted to challenge the deal, and that's what they did.
Speaker 1: I think in this case, once we have.
Speaker 9: A majority of the FTC and new people at the DOJ,
Speaker 9: we're going to see that list of settled deals that
Speaker 9: then go on to close grow.
Speaker 3: What do you make of the potential new FTC people
Speaker 3: coming in.
Speaker 1: Well, I'll just say this.
Speaker 9: If Lenacon's mission was to stop consolidation and revitalize antitrust,
Speaker 9: their mission is going to be to stop with they
Speaker 9: perceive as censorship of conservative viewpoints by big tech platforms.
Speaker 9: There has been a lot of talk about that, even
Speaker 9: suggesting that there could be collusion amongst big tech platforms
Speaker 9: to censor conservative viewpoints and that the FTC should be
Speaker 9: going after these companies under the anti trust laws to
Speaker 9: stop them.
Speaker 1: And I think that's going to be a big focus.
Speaker 5: So what's the timing there at the FTC and the DOJ.
Speaker 5: When are the new sheriffs? If you will kind of
Speaker 5: get in town, the.
Speaker 1: FTC could be DOJ will be quick, these people will leave.
Speaker 9: The appointees by Biden will leave in January, and that
Speaker 9: is the expectation also that Lena Kon at the FTC
Speaker 9: will leave in January as soon as Trump is inaugurated
Speaker 9: January twenty, then Andrew Ferguson will become the chair. If
Speaker 9: Lena Khan is still there, she'll then just become a commissioner,
Speaker 9: but she will probably leave. And then at that point
Speaker 9: he just has to get his new appointment mark meter
Speaker 9: through the Senate confirmation process.
Speaker 1: It could take a few months. He has a majority
Speaker 1: in the Senate.
Speaker 9: In the House, I don't think it's going to be
Speaker 9: too difficult, So it'll be a few months, and in
Speaker 9: the meantime it'll.
Speaker 1: Be a two to two FTC.
Speaker 9: Probably the DJ will change over more quickly, probably in January.
Speaker 3: So if I'm a company and I'm interested in buying
Speaker 3: another company, do I get on the list now? Do
Speaker 3: I wait until all the stuff is cleared and then
Speaker 3: I get on the waiting list to get my deal done?
Speaker 3: Like what's my strength?
Speaker 1: I think if you know that it has some issues.
Speaker 9: Let's say, if we see this big chocolate deal that
Speaker 9: I've been hearing.
Speaker 1: About my mom, right, if you know that, uh exactly, Mondali.
Speaker 9: Is hershey, And if you know you're probably going to
Speaker 9: get investigated, you can go ahead and file it now
Speaker 9: because you have eight months ahead of you and the
Speaker 9: new people will be the decision maker.
Speaker 1: So if you have a deal you think has no
Speaker 1: issues and could get through in thirty.
Speaker 9: Days, maybe you wait right because you have a greater
Speaker 9: hope of just getting it cleared in thirty days once
Speaker 9: the new people are in.
Speaker 5: Do you have any pending on this mand Leze Hershey deal.
Speaker 9: I know it sounds crazy, but I actually think they
Speaker 9: have a shot at getting that through. I mean, really,
Speaker 9: the only overlap is in chocolate, and the FTC has
Speaker 9: tended to look at food markets very very narrowly, not
Speaker 9: all chocolate, but certain kinds of chocolate, and if they
Speaker 9: do that, those overlaps become more limited and perhaps there
Speaker 9: are more competitors.
Speaker 1: So I actually think that there's a shot there for
Speaker 1: that deal, even though.
Speaker 5: It's huge, and I do I did get some confirmation
Speaker 5: via the Internet that Oreo cookies are in fact vegan.
Speaker 3: Yeah, I know I would guess that's wrong, but I
Speaker 3: know that. I mean it just because they're vegan, It
Speaker 3: doesn't mean that they're good. It's right on her desk, okay,
Speaker 3: But like, then, what's in it? Okay? So it's sugar?
Speaker 3: Oh I see, Okay, it's like palm oil and flour.
Speaker 7: I got you.
Speaker 3: Okay, that makes sense. But it's not like, Yay, that's
Speaker 3: good for you situation.
Speaker 7: Okay, it's not.
Speaker 3: I make a really good vegan chocolate cake, by the way,
Speaker 3: you do really good. Best chocolate cake I've ever had. Okay,
Speaker 3: super moist.
Speaker 5: Now you have to clarify that by saying or just
Speaker 5: qualify by saying, best vegan cake I ever.
Speaker 3: Had, best talc cake period. But if you're also vegan,
Speaker 3: you can also eat this cake. Just put it out.
Speaker 1: I need that recipe.
Speaker 3: Oh, I'll send it to you. I'm telling you it's
Speaker 3: really really good. I hate cake and I love me
Speaker 3: this cake.
Speaker 5: Everything you want to know about the anti trust, we
Speaker 5: go to Jennifer and Cake. We got to Jennifer Ee,
Speaker 5: senior litigation analyst for Bloomberg Intelligence, joining us here in
Speaker 5: our Bloomberg Interactive Broker studio. So tough day for the
Speaker 5: supermarket business in terms of getting deals done. But we'll
Speaker 5: see what happens in the chocolate business.
Speaker 3: Yeah, we'll see what happens to chocolate business.
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