Continuing an acquisition binge that began a year and a half ago, K mart Corp. said Monday that it has agreed to acquire Pay Less Drug Northwest Inc., which operates 85 stores in California, for about $500 million.
Under terms of a definitive merger agreement, Troy, Mich.-based K mart will pay $27 a share in cash for all 18.5 million shares of Pay Less' outstanding common stock. The stock purchase will be made by a K mart subsidiary through a tender offer that begins Friday.
About 5.8 million, or 32%, of Pay Less' stock is owned by large financial institutions.
The rapidly growing Wilsonville, Ore.-based firm operates 164 drug stores in California, Oregon, Washington, Idaho and Nevada. In the first nine months of 1984, the company had sales of $651.56 million and net income of $15.27 million.
In 1980, it acquired Oakland-based Pay Less Drug Stores, which operated 61 stores under that name in California.
Pay Less shares closed Monday on the New York Stock Exchange at $27.50 a share, up 25 cents, while K mart closed at $36.125, up $1.