PANTRY PRIDE BUYING ADAMS DRUG: NEW BUSINESS, NEW GEOGRAPHIC MARKET
Pantry Pride is paying $100 mil. in cash for Adams Drug to move into drug retailing and the Northeast. The supermarket chain currently operates 100 food units in the Southeast and 84 recently added home improvement centers in 27 states. The home centers were purchased in May via acquisition of New York-based Devon Home Center Stores. The acquisition of Adams allows Pantry Pride to try its hand at drug retailing in a region that is relatively well insulated from competition by the large natl. chains. Adams operates 420 drug and health and beauty aid stores in 10 Northeastern states. The chain is phasing out its smaller health and beauty aid stores in favor of a focus on larger stores with pharmacy departments. Under the agreement, Pantry Pride will pay $100 mil. to purchase Adams at a cash price of $24.39 per share. The acquisition is subject to a minimum tender of $80% of the company's 4.1 mil. shares of outstanding stock. Approximately 70% of Adams stock is owned by the Salmanson family, which has agreed to tender its shares to Pantry Pride. The drug chain's current management will remain in charge of operations. At $100 mil., Pantry Pride is offering about .3 times estimated 1984 sales of Adams and about 13 times estimated 1984 earnings of $7.4 mil. By comparison, Imasco paid .4 times previous year's sales and 23 times earnings for the larger Peoples purchase last March.
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