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H.J. Heinz & Co. and Beech-Nut Nutrition Corp. agreed Thursday to suspend their $185 million merger for at least a few days, pending a federal appeals court ruling on whether they may proceed. Earlier in the day, the Federal Trade Commission appealed U.S. District Court Judge James Robertson’s order issued late Wednesday denying its motion for an injunction to block the combination of the nation’s second- and third-largest baby-food makers, respectively. The FTC immediately asked Robertson to stay his order until the U.S. Court of Appeals in Washington, D.C., ruled on the injunction. Robertson declined to grant that stay, but told the companies to hold off on closing their deal until the appeals court rules on another FTC motion for a stay. Attorneys for the FTC said they expect the appeals court to rule on the motion for a stay by Oct. 26. If the stay is granted, the merger would be suspended until the appeals court rules on a new FTC motion for an injunction. Pittsburgh-based Heinz agreed Feb. 28 to buy Milnot Holding Corp. of St. Louis and its Beech-Nut subsidiary for $185 million in cash. The companies maintained that by combining their operations and their 14% market shares, they could substantially reduce costs and become a better competitor against Gerber, a unit of Novartis AG of Basel, Switzerland, and the industry leader with a 70% market share. The FTC sued in June to block the transaction, saying that the companies were more likely to collude with Gerber than compete. Robertson ruled against the federal regulator Wednesday. “Until now, no court has ever permitted a merger to duopoly in the presence … of high entry barriers or where neither firm was failing,” the FTC said in a filing in U.S. District Court Thursday. “The court’s unprecedented approval of a merger in the circumstances of this case, raises important antitrust and public interest issues that warrant careful review by the Court of Appeals before the structure of the market is irrevocably altered by defendants’ merger.” Expressing concern that any appeals court action could take months, Robertson said it would be unreasonable to expect merging companies to wait that long. “How long will it take to get a hearing? Since I can’t answer that question, I can’t grant a [stay] pending an appeal,” Robertson said in court Thursday. Copyright (c)2000 TDD, LLC. All rights reserved.

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