The largest transaction announced in 2008, according to Berkery Noyes, an advisory and financial consulting services firm specializing in M&A, has hit a roadblock. The U.S. Federal District Court in the District of Columbia granted the Federal Trade Commission’s (FTC) request for a preliminary injunction, enjoining CCC Information Services Inc. and Mitchell International Inc. from closing their previously announced merger, pending resolution of the FTC’s administrative trial currently set to commence March 31, 2009.
On Nov. 25, 2008, the FTC filed suit to block the merger of CCC and Mitchell, charging that the transaction would hinder competition in the market for electronic systems used to estimate the cost of collision repairs, known as “estimatics,” and the market for software systems used to value passenger vehicles that have been totaled, known as total loss valuation systems.
“We brought this case because of the impressive body of evidence developed by staff demonstrating that the combination of these two competitors would substantially lessen competition, ultimately leading to higher prices and less innovation for consumers,” says David Wales, acting director of the FTC’s Bureau of Competition.
CCC and Mitchell disagree.
“We are disappointed with the Court’s decision to grant the preliminary injunction,” says Githesh Ramamurthy, chairman and CEO of CCC Information Services Inc. “Both CCC and Mitchell maintain our belief that the merger will deliver significant benefits to customers, while maintaining an already competitive automotive claims marketplace. As agreed to with Mitchell, both companies intend to review the Court’s decision in depth and together assess the appropriate next steps.”
Alex Sun, president and CEO of Mitchell International Inc. adds, “There are a number of factors that both companies need to consider, including the interests of our customers, as we contemplate next steps. These deliberations are an obvious high priority for both organizations. We appreciate the patience and support of our many valued customers and employees and will be communicating our intentions as quickly as possible.”
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