Associated Dry Goods, May Department Stores to Merge
Cotten Timberlake,, THE JOURNAL RECORD
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 $3.25.
Wednesday's face value of the agreement was less than the $66 worth of May stock that May originally offered to swap for each Associated share.
But Philip Bradtmiller, an Associated spokesman, said the original offer actually translated into 0.75 a May share for each Associated share.
""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 said.
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 stores.
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. …