SUPERx RAISES BEGLEY CASH BID TO $14 MIL
SUPERx RAISES BEGLEY CASH BID TO $14 MIL. from the previous $12 mil. offer, the Phoenix-based chain announced Feb. 18. "First, we are amouncing an increase in our offer from $18.50 to $21 per share," SupeRx said. "We are also extending our new offer from Feb. 23 to March 3." In addition, the revised offer eliminates an earlier provision giving SupeRx the right to refuse to buy less than a majority of the Begley stock. The success of the SupeRx bid will likely hinge on a vote by Begley employees currently vested in the company's thrift plan. Approximately 22% of Begley, or 145,000 shares, is included in the employee thrift plan. The Begley family has already committed its 17% interest to SupeRx. The unsolicited offer was instigated by former CEO Robert Begley, who was ousted by the board from his top operating spot on Feb. 4. His responsibilities as CEO were passed on to board member Tracy Farmer. About three months earlier, the board authorized the sale of 100,000 shares to Farmer at $10 per share. Begley pledged to SupeRx the stock controlled by his family in exchange for a $125,000, one-year employment agreement, which is binding regardless of the takeover outcome. "We believe that Begley shareholders will view our offer of $21 favorably in light of the recent market prices and the current financial situation facing the company and its prospects," SupeRx said. For the third quarter ended Dec. 31, Begley reported flat sales of about $21 mil. and a 52% drop in net income to $300,000. Nine-month sales were up slightly 3% to $58 mil., but net income plummeted 96% to $30,000. Begley stock closed 1987 at $12.50 a share, but had traded above $20 during the year. While Begley's board has not yet responded to the sweetened SupeRx offer, it rejected as inadequate the earlier $18.50 a share offer ("The Pink Sheet" Feb. 1, T&G-11). Noting that the threat of the tender offer had forced the Begley management to review a variety of approaches to protect shareholders, Farmer commented: "We'd much rather be concentrating fully on reversing the financial setbacks sustained under Bob Begley's leadership than investing time and capital in protecting the plan he and Mr. Wolken [who heads SupeRx] have devised to take us over." A former Kroger drugstore exec, Wolken purchased about 50 stores from the supermarket chain when it decided to divest its drugstore business. About half of the SupeRx stores are located in the Phoenix area, with the remainder in Georgia and Alabama. Begley, based in Richmond, Kentucky, operates 43 drugstores, seven institutional pharmacies, six home health enters and 127 dry cleaning outlets.
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