Beverly tops 1997 deals: state's acquisitions and IPO's ring up $4.7 billion.

More than 200 multimillion-dollar deals totaling about $4.7 billion were announced in Arkansas last year.

The largest deal in the state in 1997 was Beverly Enterprises Inc.'s $870 million sale of its Pharmacy Corp. of America subsidiary to Capstone Pharmacy Services Inc. of Baltimore. Beverly Enterprises sold the division to help reduce its $1.1 billion debt by about $275 million.

The sale gave Beverly Enterprises shareholders 57 percent ownership of Capstone, which became the nation's largest pharmacy company.

Jim Griffith, Beverly Enterprises' senior vice president for investor relations, said after the sale that reaction from shareholders "has been very positive."

David Banks, Beverly Enterprises' chairman and chief executive officer, said at the time that the selloff would allow the company to "focus even more sharply on maximizing profitable growth within our core business."

Since the sale was announced in April, Beverly Enterprise's stock has remained flat at about $14.50 a share.

Arkansas Business compiled the list of mergers, acquisitions, stock offerings and real estate transactions with the help of Houlihan Lokey's Mergerstat of Los Angeles, a firm that tracks publicly announced U.S. mergers and acquisitions. Other information was taken from companies' filings with the Securities and Exchange Commission and real estate deeds from central and northwest Arkansas.

Only deals announced in 1997 are included. Recent transactions such as Regions Financial Corp.'s $2.5 billion purchase of First Commercial Corp. and Alltel Corp.'s $4 billion acquisition of 360 [degrees] Communications Co. will show up next year in Arkansas Business' list of the top deals of 1998. (Incidentally, Alltel's purchase of 360 [degrees] equals 85 percent of the value of all 156 deals last year where the price was disclosed.)

The second-largest transaction of 1997 was struck by Wal-Mart Stores Inc., which invested $770 million to buy controlling interest in its Mexican partner, Cifra SA, in June.

Without a doubt, the most publicized Arkansas transaction was Tyson Foods Inc.'s $642 million purchase of nearby poultry processing rival Hudson Foods Inc., which was announced in September. James T. "Red" Hudson was pressured into selling his 25-year-old namesake company after the Food and Drug Administration convinced Hudson to enact the largest recall of beef in U.S. history: 25 million pounds in July after evidence of e. coli bacteria was found in some of the meat in Colorado.

In all, nine deals totaled $100 million or more last year. Some transactions with unannounced prices - for example, Wal-Mart's purchase of German retailer Wertkauf Gmbh - also likely topped $100 million.

Another nine exceeded $50 million.

StaffMark Busy

StaffMark Inc., the 18-month old personnel services company based in Fayetteville, was by far the most frequent acquirer. StaffMark announced the purchase of 19 companies last year and completed a $109 million secondary stock offering to finance some of those deals. No sales price was released on 10 of those deals, but StaffMark's seven biggest acquisitions totaled about $98 million.

There were 11 stock offerings last year, including five initial public offerings. The largest was StaffMark's $109 million secondary offering.

The new Arkansas public companies [TABULAR DATA OMITTED] announced last year were HCB Bancshares Inc. of Camden with a $26.4 million IPO; Brass Eagle Inc. of Rogers with a $24.5 million IPO; Bank of the Ozarks Inc. of Little Rock with a $24 million IPO; and Newport Federal Savings Bank with a $3.7 million IPO. Power One Inc., a California firm with an $81 million IPO, is also included on the list because 46 percent of the firm is owned by Stephens Group Inc. of Little Rock or its affiliates.

Banks and financial institutions were involved in almost 30 deals last year, from Mercantile Bancorporation's $87 million purchase of Horizon Bancorp Inc. announced July 31 to Southeast Arkansas Banc Corp. of Lake Village's estimated $1.5 million purchase of Jefferson County Bank in Fayette, Miss.

Health care acquisitions accounted for 21 deals last year, the four largest totaling $1.3 billion. These transactions were $100 million or more each: Beverly Enterprises' sale of PCA at $869.1 million; Integrated Healthcare Solutions Inc.'s $154 million purchase of Alltel's TDS Healthcare Systems Inc. subsidiary; Complete Care Services' $142.5 million acquisition of 49 Beverly Enterprises nursing homes in Texas; and St. Vincent Health System's estimated $100 million purchase of Columbia Doctors Hospital in Little Rock. The four deals were among the top eight in the state last year.

Unnoticed Deals

Several of the deals received little, if any, publicity last year.

Among those transactions are:

* Stephens Group Inc. acquired majority interest in United Medical Inc. in Wynne in July for an undisclosed price.

Since Stephens' investment, United Medical has completed five acquisitions and now has 37 locations, says Randal Caldwell, president of United Medical.

"It's given us access to capital to be able to do some acquisitions and to grow the company," Caldwell says of Stephens' investment.

United Medical's acquisitions include Home Oxygen Medical Equipment Co. of Fort Smith; Triangle Medical Supply of West Point, Miss.; Vital Care Pharmacy of Vicksburg, Miss.; and Eagle Medical Equipment Co. and Respiratory Supply Services, both of Livingston, Tenn. Caldwell says United Medical could close on three more acquisitions within 30 days.

"We're very pleased," Caldwell says. "We have some expertise, financial knowledge and good guidance and support."

Caldwell says United Medical's goal is to grow the company to $75 million in sales within three years. With the additional acquisitions, Caldwell anticipates United Medical will have annual sales of about $50 million by July.

* Aviation Sales Co. of Miami paid $18 million for Aerocell Structures Inc. of Hot Springs in September.

Aviation Sales issued 620,970 shares to complete the acquisition of Aerocell. Those shares are now valued at about $26.6 million, based on Tuesday's close of $42.81.

Aerocell, with 245 employees in Hot Springs, specializes in the maintenance, repair and overhaul of airframe components, including structural assemblies for commercial aircraft. It had revenue of $16.3 million for its fiscal year that ended April 30.

James Y. Johnson II and Kenneth Loomer, two of the six equal owners of Aerocell, agreed to stay on with Aviation Sales and run the Hot Springs operation.

Johnson and Loomer signed three-year employment agreements with Aviation Sales. Johnson is now vice president of sales and marketing for Aviation Sales, and Loomer is vice president of operations. Both still work at Aerocell's plant in Hot Springs.

Johnson declined to mention the other four owners of Aerocell, which was founded in 1991.

Johnson says Aerocell plans to continue growth in sales and size. A 93,000-SF facility is under construction across Centennial Drive from the main plant in Hot Springs.

Dale Baker, chairman of Aviation Sales, said at the time of the acquisition that Aerocell had a reputation nationally for high-quality repair work in the industry.

Aviation Sales is considered an international leader in the aircraft spare parts redistribution market. It sells parts for aircraft made by Boeing Co., McDonnell Douglas Corp., Lockheed Martin Corp. and Airbus.

* Alrenco Inc. of New Albany, Ind., bought Fastway Inc. of Little Rock for $11.9 million in cash in May.

At the time of the deal, Fastway had 20 rental-purchase locations in Arkansas, four in Mississippi, three in Missouri and one in Texas. The stores rent and sell products such as televisions, video cassette recorders, stereos, refrigerators, appliances, furniture and accessories.

William and Sherry Cloud sold Fastway and signed noncompete agreements with Alrenco through Jan. 2, 2002.

* Crane Co. of Stamford, Conn., paid an estimated $10 million for Polyvend Inc. of Conway in March.

Crane is the largest U.S. distributor of doors, windows and millwork. Its National Vendors division, based in Bridgeton, Mo., designs and manufactures vending machines, as does Polyvend.

* HealthCor Holdings Inc. of Dallas bought CareNetwork Inc. of Little Rock for about $9.5 million in April.

HealthCor acquired all of the outstanding stock of CareNetwork, which provides nursing services in Little Rock, Fort Smith, Lowell and Hot Springs. Barry and Pat Solomon owned CareNetwork, which does about $12 million-$15 million in annual sales.

* Alltrista Corp. of Muncie, Ind., announced in February 1997 it would acquire Viking Industries of El Dorado.

Viking, which has annual sales of about $15 million, makes plastic products such as bathtubs, shower stalls and whirlpool spas for manufactured homes and recreational vehicles. It has 180 employees at plants in El Dorado and South Whitley, Ind.

The purchase price for Viking was not disclosed.