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Dispute Results in New Buyer for Jurgensen's

November 12, 1986|JUBE SHIVER Jr. | Times Staff Writer

Following a financial dispute, Jurgensen's--the posh grocery chain--announced Tuesday that it has terminated its merger agreement with Old Dominion Financial Corp. and is seeking to merge with Yucaipa Capital Corp.

An agreement in principle was struck with Yucaipa, a privately held Riverside firm headed by investor Ron Burkle, under which Yucaipa would acquire Jurgensen's outstanding capital stock through a merger valued at about $3.2 million.

Old Dominion, a privately held, year-old firm based in Carson, had offered to pay about $3.6 million in cash for the 10-store chain operated by Pasadena-based Jurgensen's Inc., where Southern California gourmets and celebrities go for such pricey delicacies as fresh truffles and pate de foi gras. But that deal, announced last May, fell through last month.

Jurgensen's and Old Dominion offered different explanations of why their merger failed to materialize.

Ted Clabaugh, president of Old Dominion, said that after close inspection, Jurgensen's posh stores were deemed too financially troubled to resuscitate. "The company has sustained losses for four years; it needs new management," said Clabaugh. "The company has had a series of problems . . . part of which is its competition."

Competition in Market

Jurgensen's competitors in the pricey specialty area include Irvine Ranch Farmers Market and Gelson's, which operate stores up to four times larger than Jurgensen's.

Bob Jurgensen, acting president of Jurgensen's and the son of the chain's 77-year-old founder, Harold Jurgensen, declined to respond to Clabaugh's comment but said it was Old Dominion's inability to come up with financing that doomed the agreement.

Jurgensen said that after negotiations stalled last month, his company sought out Ron Burkle, who had previously made an offer for Jurgensen's.

Burkle described Jurgensen's as "a well-established company with a good reputation." He said he plans to renovate Jurgensen's stores with an eye toward "expanding the produce and meats sections." Burkle added that he doesn't contemplate any layoffs of Jurgensen's 125 employees.

Under the agreement, holders of Jurgensen's 365,467 shares of common stock would receive $7.73 cash per share, less certain expenses estimated not to exceed 7 cents per share. The preferred stockholders would receive $25 cash per share. Under the previous offer, common shareholders were to receive $8.85 per share and $25 for each preferred share.

The merger is subject to approval by Jurgensen's stockholders and certain other conditions.

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