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Can Purchasing Efficiencies Save Mega-Mergers? The D.C. Circuit Says “No”

John R Ingrassia et al., Proskauer Client Alert, May 10, 2017

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Efficiencies, economies of scale, and the general desire to improve the customer experience are the lifeblood of all mergers. And one of the most common efficiencies in any deal comes from enhanced purchasing power, or the ability to lower costs through increased volume. Long before a deal is announced, merging parties will create clean teams focused on comparing costs, hoping to leverage the better rates that one firm or the other has negotiated with key vendors. This low hanging fruit – simply moving volume from high-cost vendors to lower cost ones – is among the most basic, least speculative efficiencies and can often provide a powerful rationale for doing the deal. But can they save a mega-merger?

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