REVCO OPENS HOSTILE BID FOR DRUGSTORE-CHAIN RIVAL BIG B.Byline: Daily News Wire Services Revco D.S D.S Drainage Structure (flood protection) . Inc., one of the country's biggest drugstore chains, began a $330 million hostile takeover Hostile Takeover A takeover attempt that is strongly resisted by the target firm. Notes: Hostile takeovers are usually bad news, as the employee moral of the target firm can quickly turn to animosity against the acquiring firm. bid Monday for Big B Inc., a Southern competitor, while two smaller retailers announced a friendly merger. ShopKo Stores ShopKo Stores, Inc. is a chain of retail stores based in Ashwaubenon, Wisconsin, outside of Green Bay, behind Bay Park Square shopping mall which has ShopKo as one of its anchor tenants. The company employs approximately 16,000 people and has a presence in 13 states. Inc., a Green Bay, Wis.-based discount merchandiser, and Phar-Mor Inc., a drug chain based in Youngstown, Ohio, said they would combine under a new holding company, while keeping separate store names. The moves underscore the increasingly competitive environment in drug retailing. Companies are trying to expand their markets and cut expenses as their profits are squeezed by health maintenance organizations, which demand deep discounts in prescription prices. ``This industry is undergoing consolidation. The rules of the game are changing due to the move to managed health care by all providers,'' said Jack Russo, securities analyst at A.G. Edwards Inc. in St. Louis. Revco's bid is its first major strategic move since April, when Rite Aid Corp., the No. 1 drug retailer, abandoned its buyout of Revco amid opposition from government regulators who feared it would dominate too many markets. Revco remains the No. 2 drug retailer with 2,184 stores in the Midwest, Southeast and East and $4.5 billion in annual revenues. The company doubled its size in 1994 by buying Hook SupeRx Inc. two years after emerging from a four-year bankruptcy reorganization. Big B Inc., based near Birmingham, Ala., has 397 stores in five Southern states and about $750 million in annual revenues. Like many drug chains, it is suffering from declining profits partly due to the increasing dominance of cost-conscious managed care companies. Revco, which already owns 5.4 percent of Big B, is offering $15 per share in cash for the rest, a nearly 19 percent premium over its closing price last week. Analysts said Big B management resisted a friendly buyout offer of $14 per share. Anthony Bruno, Big B chairman and chief executive, said Monday the company's board is considering the offer and advised shareholders to wait. Big B's shares rose $3.25 to $15.87-1/2 on the Nasdaq stock market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. , indicating investors believe Revco will boost its bid or another suitor SUITOR. One who is a party to a suit or action in court. One who is a party to an action. In its ancient sense, suitor meant one Who was bound to attend the county court, also, one who formed part of the secta. (q.v.) will outbid out·bid tr.v. out·bid, out·bid·den or out·bid, out·bid·ding, out·bids To bid higher than: We outbid our rivals at the auction. it. Revco shares gained 12-1/2 cents to $25.75 on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. . D. Dwayne Hoven, Revco's president and chief executive, said the combined company will be able to spread its costs over a larger base of stores and lower prices. Hoven said in a telephone news conference he did not anticipate antitrust problems because the two companies have little territorial overlap. Hoven said all of the Big B stores would be renamed Revco. In the other deal, ShopKo and Phar-Mor said they would merge under a holding company called Cabot Noble Inc., which would swap its newly issued stock for the shares of the existing companies. Combined, they would rank as the nation's eighth-largest pharmacy group. The deal values ShopKo at about $552 million to $576 million, a premium of 6 percent to 11 percent over its closing price Friday. It values Phar-Mor at its current market value, just under $100 million. ShopKo's 46 percent owner, the retailer and food distributor Supervalu Inc., will sell out its stake after the merger. ShopKo shareholders will dominate the new company, holding a 77 percent stake. ShopKo has 130 stores in 15 states mostly in the Midwest, Northwest and Mountain states and $2 billion in annual revenues. It sells clothing, housewares house·wares pl.n. Cooking utensils, dishes, and other small articles used in a household, especially in the kitchen. , drugs and other merchandise and manages prescription drug prescription drug Prescription medication Pharmacology An FDA-approved drug which must, by federal law or regulation, be dispensed only pursuant to a prescription–eg, finished dose form and active ingredients subject to the provisos of the Federal Food, Drug, benefits programs for health insurers and HMOs. Phar-Mor has 102 stores in 18 states, mostly in Ohio, Pennsylvania and Virginia and about $1.2 billion in revenues. It is slowly emerging from a bankruptcy reorganization following an embezzlement embezzlement, wrongful use, for one's own selfish ends, of the property of another when that property has been legally entrusted to one. Such an act was not larceny at common law because larceny was committed only when property was acquired by a "felonious taking," i. scandal that forced the closing of about 200 stores and the end of 16,000 jobs. John Ficarro, Phar-Mor vice president, said no decisions on job reductions have been made. Robert Haft, Phar-Mor chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , will lead Cabot Noble with those same titles. Phar-Mor shares fell 75 cents to $7.37-1/2 on the Nasdaq while ShopKo lost 12-1/2 cents to $16.12-1/2. CAPTION(S): Map Map: Drug store merger Associated Press |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion