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Executive Summary

AMERICAN STORES' SWEETENED $ 50 A SHARE BID FOR LUCKY Stores may turn sour if Lucky decides pursue the anti-takeover activities it is reportedly considering, American Stores cautioned in a March 29 letter to Lucky. American Stores raised its previous $ 45 a share offer to $ 50 on March 28, increasing the offer's total value from roughly $ 1.7 bil. to over $ 1.9 bil. for Lucky's 38.4 mil. shares outstanding. In the letter, American Stores Chairman L.S. Skaggs notes: "we have heard various reports to the effect that, as a response to American Stores' tender offer, Lucky Stores, Inc. may be considering an acquisition which could interfere with the American Stores offer." If so, the letter adds, "you should be aware that any such transaction could impact our willingness to enter into a merger agreement at the $ 50 per share price." American Stores would also consider divesting whatever Lucky acquires after that chain is purchased. Skaggs stated: "We have already indicated our willingness to consider divestitures of stores in order to mitigate any antitrust concerns which may exist. Should Lucky undertake an acquisition of another supermarket chain, we would consider disposing of any acquired company intact and this could negatively impact the price your shareholders will receive." Lucky has not publicly responded to the letter; the company says it is reviewing both the $ 45 per share and revised $ 50 a share offers by American Stores. Lucky's stock closed on March 31 at 47-1/2, down 7/8, indicating continued speculation that the firm may undertake anti-takeover activities. One course that the company has reportedly considered is a counter-offer for American Stores. American Stores announced its first unsolicited tender offer for Lucky on March 22, proposing that American Stores combine its Alpha Beta stores with Lucky's outlets, and that both chains be operated under the Lucky name ("The Pink Sheet" March 28, T&G-13). Ninety-seven of the 483 Lucky food chain outlets include pharmacies.

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