Mergers, Acquisitions and Divestitures

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      JetBlue and Spirit Call Off Their Merger

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      JetBlue said it would pay Spirit $69 million to terminate the $3.8 billion deal, which had been blocked by federal antitrust regulators.JetBlue Airways and Spirit Airlines announced on Monday that they would walk away from their planned $3.8 billion merger after federal antitrust regulators successfully challenged the deal in court. JetBlue said it would pay Spirit $69 million to exit the deal.A federal judge in Boston blocked the proposed merger on Jan. 16, siding with the Justice Department in determining that the merger would reduce competition in the industry and give airlines more leeway to raise ticket prices. The judge, William G. Young of the U.S. District Court for the District of Massachusetts, noted that Spirit played a vital role in the market as a low-cost carrier and that travelers would have fewer options if JetBlue absorbed it.“We are proud of the work we did with Spirit to lay out a vision to challenge the status quo, but given the hurdles to closing that remain, we decided together that both airlines’ interests are better served by moving forward independently,” JetBlue’s chief executive, Joanna Geraghty, said in a statement on Monday. “We wish the very best going forward to the entire Spirit team.”JetBlue and Spirit appealed Judge Young’s decision. JetBlue filed an appellate brief last week arguing that the deal should be allowed to go through.But in a regulatory filing on Jan. 26, JetBlue said it might terminate the deal. Spirit said in its own filing the same day that it believed “there is no basis for terminating” the agreement.The merger agreement, which expired on Jan. 28, could have been extended to July 24 if certain conditions were met. But JetBlue suggested in its filing in January that Spirit had not met some of its obligations under the agreement, giving JetBlue the ability to walk away.As part of the merger agreement, JetBlue agreed to pay Spirit and its shareholders $470 million in fees if the deal was blocked. Some legal experts said JetBlue was potentially positioning itself to dispute the remainder of those fees by terminating the agreement.Spirit is heavily indebted and last turned a profit before the Covid-19 pandemic. Investors see a merger as a lifeline for the company. Its stock price has lost more than half its value since the ruling blocking the merger.JetBlue’s stock nudged up on the same news, as investors see the end of the deal as a cost-saving measure.A merger of the airlines would have given the combined company a bigger share of the market, which is dominated by four carriers — American Airlines, Delta Air Lines, Southwest Airlines and United Airlines.Alaska Airlines has also announced plans to increase its size. In December, it said it wanted to acquire Hawaiian Airlines for $1.9 billion. That deal, too, is likely to attract the scrutiny of federal antitrust regulators. More

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      The F.T.C. Boosts Biden’s Fight Against Inflation

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      The regulator’s move to block Kroger’s $25 billion bid for Albertsons could win the president points with voters squeezed by rising prices.Kroger’s “low prices” promise has come under fire after the F.T.C. and a number of states sued to block the supermarket giant’s $25 billion bid to buy Albertsons.Rogelio V. Solis/Associated PressKroger, Albertsons and the politics of inflation A paradox at the heart of the U.S. economy is that consumers are feeling squeezed even as growth indicators look strong — and are taking it out on President Biden’s approval ratings.So the White House probably cheered a move by the F.T.C. and several states on Monday to block Kroger’s $25 billion bid to buy Albertsons, arguing that the biggest supermarket merger in U.S. history would raise prices and hit union workers’ bargaining power.The Biden administration has little influence over inflation, but it’s still getting heat. Consumers are spending the highest proportion of their income on food in 30 years, and an internal White House analysis found that grocery prices had the biggest impact on consumer sentiment.The Fed has jacked up interest rates to a 20-year-high in an effort to cool inflation, but progress on that has slowed in recent months.Biden is blaming big business. In a video released on Super Bowl Sunday, he went after “shrinkflation,” lashing out at companies for reducing packaging sizes and food portions without cutting prices. Biden is expected to reiterate that view in his State of the Union address next month.The president could point to the F.T.C.’s tough approach to M.&A. The agency operates independently, but Lina Khan, the F.T.C.’s chair, has taken the most aggressive and expansive antitrust enforcement stance in decades. That may help Biden’s message with voters that he’s fighting for their interests.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      How Washington May Approach the Capital One-Discover Deal

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      Regulators have been tough on big financial mergers, though there are nuances in Capital One’s $35.3 billion takeover bid for Discover.Capital One’s $35.3 billion bid for Discover is a bet that the movement to go cashless will continue to grow.Rogelio V. Solis/Associated PressChallenges, and opportunities, for a financial megadealCapital One’s $35.3 billion takeover to buy Discover Financial Services will create a colossus in the fast-growing credit card industry and a more powerful force in the payment networks that underpin the consumer economy.That will almost surely invite tough scrutiny from a Washington that is increasingly skeptical of big financial mergers. But continuing scrutiny of the two biggest payment networks in the U.S., Visa and Mastercard, may complicate the regulatory math.The deal: Capital One agreed to pay 1.0192 of its shares for each share of Discover, a roughly 26 percent premium to Friday’s trading prices. Discover’s shares were up more than 13 percent in premarket trading on Tuesday.If completed, the transaction would become a giant among credit card lenders, with Bloomberg estimating that the combined company would outstrip JPMorgan Chase and Citigroup in U.S. card loan volume. (That could ratchet up examinations over shrinking competition, and what that means for consumers.)Perhaps more important is the potential supercharging of Discover’s payment network, which has long lagged Visa, Mastercard and American Express. The Wall Street Journal reported that Capital One plans to switch some of its credit cards to the Discover network.The contrarian argument: This is good for Visa and Mastercard. The longtime giants of the payment network business have long been criticized for their fees, with Visa being investigated by the Justice Department. Monday’s deal could give them the opportunity to argue that they would face a newer, bigger competitor.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Capital One to Acquire Discover, Creating a Consumer Lending Colossus

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      The all-stock deal, which is valued at $35.3 billion, will combine two of the largest credit card companies in the United States.Capital One announced on Monday that it would acquire Discover Financial Services in an all-stock transaction valued at $35.3 billion, a deal that would merge two of the largest credit card companies in the United States.“A space that is already dominated by a relatively small number of megaplayers is about to get a little smaller,” said Matt Schulz, chief credit analyst at LendingTree.Capital One, with $479 billion in assets, is one of the nation’s largest banks, and it issues credit cards on networks run by Visa and Mastercard. Acquiring Discover will give it access to a credit card network of 305 million cardholders, adding to its base of more than 100 million customers. The country’s four major networks are American Express, Mastercard, Visa and Discover, which has far fewer cardholders than its competitors.But consumer advocates pushed back on the possible deal, saying it posed antitrust concerns. “It is very difficult to imagine how federal regulators could allow Capital One to buy Discover given the requirement that mergers benefit the public as well as insiders,” Jesse Van Tol, the chief executive of the National Community Reinvestment Coalition, said in a statement.The acquisition by Capital One will be one of the first tests of regulatory scrutiny on bank deals since the Office of the Comptroller of the Currency said last month that it intended to slow down approvals for mergers and acquisitions.“It’s hard to know which way it would go, but there will certainly be a lot of attention paid to this deal because of the money and magnitude of the companies involved,” said Mr. Schulz.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Adam Neumann Wants to Take Over WeWork

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      Adam Neumann, the co-working company’s onetime chief, has sought for months to buy the now-bankrupt business, but accuses its current leaders of stonewalling him.Lawyers for Adam Neumann accused WeWork of stonewalling his takeover approach.Shahar Azran/Getty ImagesWeWork’s founder is trying to buy it Adam Neumann shot to fame by turning WeWork into a cultural and business phenomenon, before being ousted from the work space operator in dramatic fashion.But for the past several months, he has been trying to buy the now-bankrupt business — with the help of the hedge fund mogul Dan Loeb, DealBook is the first to report.Neumann’s new real estate company Flow Global is pushing WeWork to consider its takeover approach, according to a letter his lawyers sent to WeWork’s advisers on Monday. Flow which has already raised $350 million from the venture capital firm Andreessen Horowitz, disclosed in the letter that Loeb’s Third Point would help finance a transaction. (Read the letter.)Flow has sought to buy WeWork or its assets, as well as provide bankruptcy financing to keep it afloat.But Flow’s lawyers accused WeWork of stonewalling for months. “We write to express our dismay with WeWork’s lack of engagement even to provide information to my clients in what is intended to be a value-maximizing transaction for all stakeholders,” wrote the lawyers led by Alex Spiro of Quinn Emanuel, who also represents Elon Musk and Jay-Z.It’s the latest twist for WeWork, which over its 14-year history became a symbol of venture capital excess. The company grew rapidly, becoming the biggest tenant in many major cities and attaining a paper valuation of $47 billion. And Neumann — backed by billions from the Japanese tech giant SoftBank — increasingly pitched it as a way to “elevate the world’s consciousness.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Amazon Scraps Deal to Buy Maker of Roomba Amid Regulatory Scrutiny

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      Amazon walked away from the $1.7 billion acquisition of iRobot as it faces questions from regulators in the European Union and United States.Amazon said on Monday that it was abandoning plans to buy iRobot, the maker of the self-driving Roomba vacuum, after regulators raised concerns the deal would hurt competition.The announcement is a rare admission of defeat by Amazon, which has in recent years acquired an eclectic mix of companies such as Whole Foods and MGM Studios, and is a sign of how the world’s largest tech companies are being forced to adjust their business practices, products and policies as a result of stiffening regulatory scrutiny globally, particularly in the European Union.In November, E.U. antitrust regulators warned Amazon that they might try to block the deal because it could restrict competition in the market for robot vacuum cleaners. The Federal Trade Commission was also scrutinizing the deal.Amazon, which will pay iRobot a $94 million termination fee, said in a statement that “disproportionate regulatory hurdles” caused it to step away from the deal, which was first announced in 2022. IRobot’s products, which also include robotic mops and air purifiers, were to join a growing list of connected home products made by Amazon, including Ring home security systems and Echo smart speakers.Amazon said that rather than restrict competition, the deal would have given iRobot more resources to compete with other robotics companies.“This outcome will deny consumers faster innovation and more competitive prices, which we’re confident would have made their lives easier and more enjoyable,” David Zapolsky, Amazon senior vice president and general counsel, said in the statement.Amazon is not the only company facing hurdles completing acquisitions. In December, Adobe, the maker of Photoshop and Illustrator, scrapped a $20 billion takeover of Figma, a maker of design collaboration tools, after it was questioned by regulators in the United States, the European Union and Britain.In the European Union, oversight of the tech sector is expected to intensify in the coming months as a new law, the Digital Markets Act, takes full effect with the aim of increasing competition in the digital economy. Last week, Apple announced a slew of changes to comply with the law, including allowing customers to use alternatives to the App Store for the first time.IRobot, a publicly traded company grappling with declining sales and mounting losses, must regroup without the financial backing of Amazon. The company’s stock price has fallen more than 60 percent in the past month as the fate of the deal with Amazon was thrown into doubt.On Monday, iRobot said it would cut approximately 350 jobs, or about 30 percent of its work force, as well as reshuffle its management ranks.“The termination of the agreement with Amazon is disappointing, but iRobot now turns toward the future with a focus and commitment to continue building thoughtful robots and intelligent home innovations,” Colin Angle, the company’s founder, who is stepping down as chief executive, said in a statement.Glen Weinstein, iRobot’s executive vice president and chief legal officer, was appointed interim chief executive. More

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      Trump’s Truth Social Platform Could Struggle to Survive Without New Cash

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      Truth Social, the online platform at the core of Trump Media, has had challenges attracting advertising revenue.Former President Donald J. Trump’s social media company is running on fumes and could be at risk of folding if it doesn’t find new funds in a hurry.In a regulatory filing this week, auditors for Trump Media & Technology Group expressed doubt about the company’s ability to continue as a “going concern” without new financing. The filing also made clear that Trump Media desperately needs to complete its long-delayed merger with a cash-rich shell company so that it can tap $300 million in cash, especially if its flagship online platform, Truth Social, has any chance of surviving.The document, which offers the first detailed look at Trump Media’s finances, was filed with regulators as part of the company’s pending deal with Digital World Acquisition Corporation, the publicly traded shell company it agreed to merge with in 2021.If the transaction goes through, it could value Trump Media at $1 billion based on Digital World’s share price of $16.60. Yet, the rich valuation is no guarantee that the company, which largely relies on advertising revenue from Truth Social — and Truth Social itself — will be a viable business. Trump Media had little cash on hand by the end of June, and it has exhausted most of the $37 million in private financing it has raised since 2021, according to the filing.“Contrary to the relentless mainstream media campaign peddling false information about Truth Social, we’ve given millions of Americans their voices back using technology operated at a fraction of the cost of the Big Tech platforms,” Shannon Devine, a spokeswoman for Truth Social, said in a statement. Ms. Devine added that “Truth Social continues to move forward toward completing its merger, which we believe will enable important new ventures for the company.”Since its founding, Truth Social has been a personal megaphone for Mr. Trump, who uses the platform frequently to rail against his critics as he makes another run for president and confronts an array of criminal and civil lawsuits. The platform is popular with some of his most ardent supporters. But on any given day, much of the advertising on the platform comes from weight loss products, gold coins and “natural cures” for a variety of medical ailments.During the first six months of this year, Trump Media took in just $2.3 million in advertising revenue, according to the filing.“Truth Social is obviously not surviving on ad dollars,” said Shannon McGregor, a professor of journalism and media at the University of North Carolina who has studied social media platforms. “And the ads that are being sold are not robust or sustainable.”The former president’s platform of choice remains a relative minnow in the social media universe. This year, the Truth Social app has been downloaded three million times, according to Sensor Tower, a data provider. By comparison Elon Musk’s X, formerly known as Twitter, has been downloaded 144 million times and Meta’s Threads has been downloaded 171 million times in the nearly five months since it debuted.In all, Truth Social has been downloaded seven million times since its launch in early 2022, according to Sensor Tower.Mr. Trump has 6.5 million followers on Truth Social, compared with the 87 million he had on Twitter when he was prohibited from posting on the platform after the Jan. 6, 2021, attack on the Capitol. Mr. Musk, after buying Twitter, let Mr. Trump return to the platform, but the former president has posted only one message on X.Ms. McGregor said other social media platforms had tried to increase their audience reach by reaching deals with media personalities and influencers who bring with them a ready made group of followers.If the merger is completed, Trump Media would have the cash on hand to retain the services of conservative media influencers. But Ms. McGregor said some people might be reluctant to join a platform that was so identified with Mr. Trump, whose political future remained uncertain.“What is the future vision for a platform that is built on being a microphone for one person,” is the obvious question for any social media influencer who might be thinking of joining Truth Social, she said.The glimmer of good news for Mr. Trump is that this week’s filing of the updated merger document is an indication the deal with Digital World is moving along after being held up for nearly two years because of a regulatory investigation.The filing of a revised prospectus was one of the requirements Digital World had agreed to as part of an $18 million regulatory settlement it reached this summer with the Securities and Exchange Commission. The settlement resolved an investigation into an allegation that Digital World had flouted securities rules governing special purpose acquisition companies by engaging in early merger talks with Trump Media before its I.P.O.Trump Media, in a post on Truth Social, called the filing of the revised merger document “a major milestone toward completing our merger.”The push to complete the merger comes as Mr. Trump’s real estate business in New York is being threatened by Attorney General Letitia James’s civil fraud lawsuit against the former president, his adult sons and their family business. In September, a New York judge considering the challenge ruled that Mr. Trump had committed fraud by inflating the value of some of his real estate assets and stripped him of control over some of his signature properties.For the past several weeks, the same judge has been hearing testimony from witnesses — including Mr. Trump — to determine what kind of ultimate punishment should be meted out.With the future of some of his real estate business on shaky ground, Trump Media suddenly has become a more important piece of the former president’s business empire and calculating his personal net worth. If the merger is completed, Mr. Trump, as chairman, stands to become the single largest shareholder of Trump Media.The company’s possible $1 billion valuation after the merger is a far cry from the roughly $10 billion price tag investors had given the deal shortly after it was announced in October 2021. Still, it is significantly higher than the $5 million to $25 million valuation Mr. Trump had put on Trump Media in a financial disclosure form this year. More