ECKERD SMOKING OUT POTENTIAL SUITORS WITH "FOR SALE" ANNOUNCEMENT; INITIATES FIRST STEP TOWARD BARGAINING TABLE IN EFFORT TO DODGE FUTURE "DARTS"

Jack Eckerd is smoking out prospective merger candidates with a "for sale" announcement in an effort to avoid further surprise hostile acquisition bids like the drug chain recently went through with Dart. In an Aug. 21 release, Eckerd reported that it is "exploring various alternatives to maximize shareholder values, including a possible sale, merger or business combination of the company." Eckerd said that it is "conducting preliminary conversations with a small number of selected organizations, but no definitive proposals have been requested or received." The drug chain has retained Goldman, Sachs and Co. as its investment banker. Dart's recent aborted takeover attempt may have underscored for Eckerd management the chain's vulnerability to an unwanted takeover. Eckerd had become cash rich from the divestment of the JByrons and American Home Video units, while its stock slumped to just above 25 prior to the Aug. 21 announcement. Eckerd may have decided that the best way to head off another unwanted overture is to flush out potential suitors and begin any discussions on the chain's own terms. "We want to remove the speculation and uncertainty surrounding the company's future," Eckerd Chairman and President Stewart Turley said. "Taking this action gives the company maximum control of its future, and allows the board to determine our best course of action." Two months ago, Eckerd was preparing to fend off a threatened hostile offer from the Dart Group. That takeover attempt never materialized; instead, Dart agreed to sell Eckerd its 5% stake in the chain for $56 mil. to net a quick profit of $9 mil. At that time, Eckerd said that Dart's interest was "unwelcome" and that it was not for sale. Eckerd emerged from the Dart challenge leaner and with more cash (despite the share repurchase from Dart) due to the separate divestitures during the summer of JByrons and American Video for approximately $100 mil. each. With both Eckerd and Adams Drug on the trading block the trend toward consolidation in the chain drug store industry shows no signs of abating. In the past eighteen months, Peoples and Rea & Derick have been acquired by lmasco, Hook by Kroger, PayLess by Kmart, and Adams by Pantry Pride. Despite unloading its less than profitable JByrons and American Video operations, Eckerd indicated that it may not show a profit for the current fiscal year ended Aug. 3. Eckerd said that "preliminary estimates" show earnings from continuing operations will be "in the range of $56 mil. to $61 mil., a decrease of approximately 30% from the previous fiscal year." Eckerd explained that these estimates are "primarily attributable to unusually heavy markdowns on merchandising and, to a lesser degree, a more aggressive pricing posture." Eckerd is also facing "a one-time after-tax write off of approximately $60 mil., almost all of which is attributable to the ]divestiture of the[ video division."