NEW YORK — Even though Associated Dry Goods' acquisition by May Department Stores borders on being a done deal , the New York-based retailer's board took longer than expected Friday to give its unanimous seal of approval.
With the Associated board, "long, long deliberation goes into effect," said Chairman Joseph H. Johnson at a delayed afternoon news conference where executives of the two companies enthusiastically announced the signing of a definitive agreement in their $2.5-billion deal.
The merger, which is expected to win shareholder approval and be completed within 75 days, will put May Co. California and J. W. Robinson in Southern California under common ownership and create a department store company to rival first-place Federated Department Stores in terms of annual sales.
Under the agreement's terms, 0.86 share of May common stock will be exchanged for each share of Associated. Based on May's closing price Friday on the New York Stock Exchange, the deal has a value of about $2.5 billion, but the final total will hinge on May's price on the day the merger is effective.
Johnson a 'Tough Negotiator'
At the news conference, May Chairman David C. Farrell voiced relief at getting some return on weeks of what was at times a difficult courtship. May publicly disclosed its interest on June 22.
"He can fool you with that Southern accent," Farrell said, referring to Associated's chairman, an Alabama native. "But he can be a tough negotiator."
"The outcome of our discussions has made all the work of the past few weeks worthwhile," Johnson added.
The companies said Johnson will join the 15-member board of St. Louis-based May, as will Joseph E. Brooks, a senior vice president of Associated and chairman of its prestigious Lord & Taylor division. Four other Associated representatives will be added later.
Just how the merger will affect other employees remains unclear. Under the deal, Associated executives are not guaranteed employment, but "we hope it all stays the way it is," Johnson said.
However, Associated employees indicate that insecurity is rampant at the New York headquarters.
Farrell reiterated that May plans "to operate all existing operations of both organizations" and that the combination is expected to give them "a considerable edge in the marketplace."
Analysts have said that the merger offers May, which operates stores geared to middle-income customers, access to Associated's more upscale clientele.
Farrell, who noted that the two companies have dropped all pending litigation between them, added that May is making a "herculean effort" to comply by Monday with a Federal Trade Commission request for more information about the merger.
When large mergers are contemplated, the government investigates the possible effects on competition. Operations of May and Associated overlap in Southern California, Denver and Pittsburgh.
Jerome T. Loeb, May's vice chairman and chief financial officer, said: "We feel very strongly that in no cases will the results (of the merger) be anti-competitive."
The executives disputed any contention that Associated has agreed to a lower price than May initially offered.
It was originally reported that May had offered Associated stockholders $66 worth of stock for each Associated share. But, Johnson said, "It was never an offer of $66." He said negotiators had understood that the stock swap ratio had originally been 0.75. "It's very evident that the deal is much better than it started," he said.
Tony Robinson reported from New York, and Martha Groves reported from Los Angeles.