American Stores Co. has increased its $45 per share bid for California-based Lucky Stores to $65 - besting a New York firm's offer of $61 - and extended the expiration date of the offer to midnight June 1.
"We are pleased to inform you that, as a result of our review of the confidential information we recently received concerning Lucky Stores and our ongoing consideration, we are prepared to acquire Lucky Stores Inc. in a transaction in which all Lucky Stores Inc. stockholders will have the opportunity to receive $65 per share in cash," said American Stores Chairman L.S. Skaggs in a letter to Lucky Stores' board of directors."This offer reflects the new information we obtained and the very favorable impression we received in the course of meetings with your management" last week.
Skaggs said the merger plan American is delivering to Lucky's attorneys in Los Angeles is "substantially similar" to the plan that Lucky earlier agreed to with New York investment firm Gibbons, Green, van Amerongen following the firm's $61 per share bid.
"It has been changed, of course, to delete a number of provisions peculiar to a leveraged buyout," said Skaggs. "We assume that the Gibbons, Green agreement will be terminated . . . as a condition to our entering into the merger agreement. We believe it would be in our mutual best interests to enter into the merger agreement promptly. Therefore we propose to do so no later than the close of business on May 20."
Skaggs said American Stores has received a commitment from Morgan Guaranty Trust Company of New York to provide $500 million in credit to complete the buyout of Lucky's stock.
"Morgan Guaranty has advised us that they are highly confident of their ability to obtain commitments for the remainder of the facility, and we expect to have such commitments within the next several days," said Skaggs.
"As we have indicated in the past, we believe that substantial business advantages would accrue from the combination of Lucky's operations with those of Alpha Beta," Skaggs told Lillie, " and we view Lucky's management as a vital ingredient to the combination of the two companies.
"We are prepared to enter into incentive compensation arrangements with selected key management personnel which, we believe, would provide very attractive rewards to them for contributing to the success of the combined company. We look forward to the opportunity to work with Lucky's management in structuring a mutually satisfactory program."
Lucky said it will "respond shortly" to the offer.