AMERICAN STORES/LUCKY MERGER FURTHER DELAY POSSIBLE
AMERICAN STORES/LUCKY MERGER FURTHER DELAY POSSIBLE if the Supreme Court decides to consider the case when it reconvenes Oct. 2. On Aug. 22, Justice Sandra Day O'Connor issued an order blocking the $ 2.5 bil. merger of the two California supermarket pharmacy chains at the request of California Attorney General John Van de Kamp. His office has been fighting the merger in federal court since September on antitrust grounds, although the deal was cleared by the Justice Department and the Federal Trade Commission last year. American Stores agreed to purchase Lucky in June 1988 with the intention of combining American's Alpha Beta chain stores into a single chain operating under the Lucky name ("The Pink Sheet," May 23, 1988, T&G-6). Alpha Beta and Lucky together operate 550 stores. Lucky is currently California's largest supermarket chain, and Alpha Beta is fourth largest. Lucky has pharmacies in 97 of its 483 food outlets. A Los Angeles federal court concurred in September 1988 with the state that the merger should not be consummated. However, in March of the year, an appeals court ordered the Attorney General's office to post a $ 16.3 mil. bond to cover American Stores' potential losses during the appeals process. That bond requirement was the catalyst for Van de Kamp's petitioning for U.S. Supreme Court intervention. He argued that under the circuit court order, the case would be dropped because his office could post only a nominal amount due to budgetary constraints. Justice O'Connor's original order made no mention of the bond, apparently clearing the way for the state to seek high court review. However, the following day she amended her order to require that a bond be posted. O'Connor's action sends the matter back to Los Angeles federal court, which will determine the amount of the bond. If the original amount is reinstated the Attorney General will be forced to drop the suit, according to his office. A hearing has been scheduled for Aug. 29. A spokesperson for American Stores said the supermarket/pharmacy chain would be represented by attorney Rex E. Lee of the D.C. law firm, Sidney Austin, if the high court takes the issue under consideration. "If the suit is dropped or decided in its favor, the company expects that the legal process of the merger could be rapidly concluded," the spokesperson said.
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