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PITTSBURGH -- Giant Eagle's planned $20 million acquisition of the Latrobe, Pa.-based LeNature's, Inc. bottling plant is being put on hold in light of allegations that the regional market leader here threatened to pull products manufactured by a rival company if the latter outbid the retailer.
Bankruptcy trustee R. Todd Neilson said he has initiated an investigation that was triggered by an anonymous tip from a Pittsburgh reporter that the retailer allegedly threatened to pull Cadbury Schweppes products if the latter didn't withdraw from the bidding process for the LeNature's plant.
Although Cadbury Schweppes bid $19 million for the plant, Giant Eagle's offer was accepted Aug. 9, and the retailer planned to restart production there and hire 50 workers.
Giant Eagle spokesman Dan Donovan told Progressive Grocer that the chain "was recently informed that the bankruptcy trustee was going to be reviewing the bidding process. We have agreed to be completely cooperative with that review and to provide any information the trustee requests."
Last November LeNature's filed for Chapter 7 bankruptcy, which was later converted to Chapter 11, when it was discovered that its former c.e.o. inflated sales figures for 2005 to $275 million when the actual numbers were $32 million.
Chief U.S. Bankruptcy Judge M. Bruce McCullough will hold a hearing Aug. 30 in Pittsburgh on the allegations.
The bankruptcy trustee was quoted in local reports as saying he hoped to have the investigation completed in about a week.