May Department Stores Makes $2.7 Billion Offer to Purchase Associated Dry Goods
May is the nation's third-largest department store operator and Associated is the fifth. Both operate stores across the country under a variety of names.
In a letter released Sunday, May Chairman David C. Farrell said the two companies have talked about combining businesses for two years in discussions which have been ""friendly and positive.''
The letter, sent to Associated Chairman Joseph H. Johnson on Friday, offered $66 of May common stock for each of the 35 million outstanding shares of Associated common stock, and $211.20 of May common stock for each share of Associated's preferred stock.
May spokesman James Abrams confirmed the letter had been sent and said the deal would create a retailing giant.
But a spokesman for Associated, Joseph J. Schumm, declined to comment on the letter and told The New York Times, ""We've had absolutely no talks with May.''
Associated stock closed at $46 a share on the New York Stock Exchange Friday. May closed at $87.75.
May's offer offers a premium of 43 percent over Friday's closing price, Farrell wrote. The offer is also nearly 23 times Associated's latest reported 12-month earnings per share.
May offered seats on its board to Johnson and other Associated board members and requested a reply to its offer by Tuesday morning.
""We at May Company have great respect for your management team and believe Associated Dry Goods Corporation is a well-managed company with attractive business operations,'' Farrell's letter said. …