Lucky Stores rejected Asher B. Edelman's sweetened, $37-a-share bid as inadequate Thursday, but said its board plans to meet with him and his investment adviser to discuss further its restructuring program.
Edelman, who on Oct. 14 raised his bid to $1.89 billion from the $35 a share, or $1.79 billion, initially offered a month ago, voiced a familiar sentiment in a telephone interview Thursday:
"No. 1, I'm very disappointed to not have had my offer accepted. And No. 2, I believe that I and most of the other shareholders believe that the current restructuring is worth . . . about $31 a share, and they have rejected an offer of all cash at $37.
"I look forward to seeing a restructuring that will bring shareholders more than $37 a share," he said.
Intends to Listen
About the prospect of a meeting, Edelman said: "At this next meeting, I'll be a listener rather than a speaker. I made my proposals at last week's meeting."
Determined to thwart Edelman's advances, Lucky, based in Dublin, Calif., recently has taken drastic steps, notably closing its money-losing Gemco division. Most of those discount department stores will be sold to the Target discount-store division of Dayton Hudson for $374 million.
Lucky, which operates Lucky and Food Basket supermarkets in Southern California, also has said it plans to use proceeds from the sale of Gemco locations to Target and other buyers to repurchase as much as 22%, or 11.25 million shares, of its stock.
The company's board met Tuesday with investment bankers from Goldman, Sachs & Co. to consider its options in the face of Edelman's offer. In a statement Thursday, Lucky said directors were advised by Goldman and Salomon Bros. "that the proposed price is inadequate from a financial point of view."
Lucky added that its board will meet next week to consider "the desirability of additional steps in its restructuring program designed to enhance shareholder value and to permit the company to remain independent (and) focused on its core food business."
Observers speculated that Lucky will meet with Edelman and his adviser, Merrill Lynch Capital Markets, early next week.
Jeffrey Atkin, who follows Lucky for the Seattle money-management firm of Kunath, Karren & Rinne, said the "onus is on Lucky's shoulders" to show that its restructuring is a better deal for shareholders. "I remain not overly encouraged by what they've done so far," he said. "I still am struggling to see how they can show me or Edelman why it's worth more than $35 or $37."
Lucky stock closed up 12.5 cents at $35.625 Thursday on the New York Stock Exchange.
Lucky spokeswoman Judith Decker noted that the company has already indicated that it might spin off to shareholders its specialty-retailing divisions, which includes Kragen and Checker auto parts stores, Hancock fabric stores and Yellow Front general merchandise outlets.