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acquisition. This Court reached a similar result in Berry
Petroleum Co. & Subs. v. Commissioner, 104 T.C. 584, 622 (1995),
affd. without published opinion 142 F.3d 442 (9th Cir. 1998).
At the time the antitrust legal fees were being incurred,
the Supreme Court described the status of the “merger” involved
in this case in the following terms: “Thus, as a matter of legal
form American and Lucky were merged into a single corporate
entity on June 9, 1988, but as a matter of practical fact their
business operations have not yet been combined.” California v.
American Stores Co., 495 U.S. at 276. On this same point, the
District Court noted:
If the Hold Separate Agreement has meaning, this is not
a completed merger. Alpha Beta and Lucky, pursuant to
the Hold Separate Agreement, are performing numerous
functions as separate entities. They retain their
separate names and with them their respective corporate
identities. While defendants maintain that it is
“verbal calisthenics” to issue injunctive relief to
stop a merger contending that such is tantamount to
divestiture, they, nevertheless, ask the Court to
perform a linguistic triathalon to understand how a
Hold Separate Agreement is equivalent to a completed
merger. The Court is unable to make such a leap in
reasoning. [State of Cal. v. American Stores Co., 697
F. Supp. at 1134; fn. ref. omitted.]
When the legal fees were incurred, the substance of the
merger was not complete, despite the passage of title in the
Lucky Stores shares. The hold separate agreement and the
subsequent injunction issued by the District Court preserved the
status quo that existed prior to the Lucky Stores acquisition by
preventing the integration of the two supermarket chains in order
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