Drug Store Chain Big B Accepts New Revco Offer For Merger
BESSEMER, Ala. (AP) _ The board of the Southern drug store chain Big B has accepted a sweetened $380 million buyout offer from drug giant Revco D.S. Inc., the companies said today.
Big B signed a tentative merger agreement at $17.25 per share, up from Revco’s initial offer last month of $15 a share which had valued Big B and its 22 million shares at about $330 million.
Big B’s acceptance comes after weeks in which it courted other offers and tried to block Revco.
The deal would give Revco, based in Twinsburg, Ohio, an additional 382 pharmacies in five Southern states. Revco is currently the nation’s second-biggest drug store chain with 2,202 stores in 14 states.
Under the agreement, Big B shelved a anti-takeover plan, popularly known as a ``poison pill,″ that it had put in place to thwart Revco’s uninvited bid. The companies also agreed to drop all litigation over the initial offer, and Big B said it will recommend that its shareholders accept the new offer.
``Our board of directors unanimously concluded that this transaction with Revco is in the best interests of Big B’s shareholders and employees,″ said Anthony Bruno, chairman and chief executive of Big B.
D. Dwayne Hoven, president and chief executive officer of Revco, said the merger would allow the combined company to economize on costs, and thus lower prices.
The deal has already cleared federal antitrust review, the companies said.
Earlier this month, the nation’s largest drugstore chain, Rite Aid Corp., agreed to acquire West Coast competitor Thrifty PayLess Inc. for about $1.4 billion in stock. The purchase would create a chain of more than 3,500 stores in 26 states and the District of Columbia.
In April, Rite Aid abandoned a $1.8 billion deal to buy Revco, under pressure from federal antitrust regulators uneasy about the idea of allowing the nation’s two largest drug chains to combine.