Corp. and May Department Stores Co. said Wednesday they have agreed
in principle to merge through a stock swap valued at $2.53 billion,
creating one of the nation's largest retailers.
The announcement followed days of negotiations during which the
companies had difficulty agreeing on how many May shares would be
exchanged for each Associated share. Associated's board of directors
had rejected two earlier, unsolicited bids from May as too low.
Under the agreement, Associated shareholders are to receive for
each of their shares 0.86 of a May share, the companies said.
Based on May's closing stock price Wednesday, the value would
amount to $61.81 a share. The final value of the deal will depend on
the price of May's stock on the day the merger is completed.
Associated has about 41 million common shares outstanding if all
its preferred stock is converted into common stock and all options on
its stock are exercised.
May closed at $71.87 1/2, down $3 a share in composite trading on
the New York Stock Exchange. Associated closed at $58.75, down
Wednesday's face value of the agreement was less than the $66
worth of May stock that May originally offered to swap for each
But Philip Bradtmiller, an Associated spokesman, said the original
offer actually translated into 0.75 a May share for each Associated
""Our shareholders will receive 15 percent more of May stock. The
only time your value is certain is when you realize it in cash. We
at no time were dealing with a 100 percent cash offer,'' Bradtmiller
Associated is betting that May's stock price will rise.
The combined sales of Associated and May - about $9.413 billion -
would rank the merged company as the nation's fourth largest retailer
behind Sears, Roebuck and Co., K mart Corp., and J.C. Penney Co.,
based on the major retailers' 1985 sales.
Associated earned $119.7 million, or $3 a share, on sales of
$4.385 billion in 1985. Its divisions include Lord & Taylor, J.W.
Robinson, L.S. Ayres, Goldwaters, and Caldor. It operates 346
May, with headquarters in St. Louis, earned $235 million, or $5.38
a share, on sales of $5.028 billion last year. In addition to its
143 May department stores, the company operates 65 Venture discount
stores and 2,005 Payless ShoeSource stores.
May and Associated said the agreement was contingent on reaching a
definitive agreement, approval by both companies' boards and
shareholders and other customary conditions. …