Lucky Considers Buyout

The stock price of Lucky Stores Inc. rose Wednesday after the sixth-largest U.S. grocery chain operator announced that it has considered a leveraged buyout to thwart a hostile $1.74-billion takeover bid by American Stores Inc.

American Stores Inc. has bid $45 a share for Lucky, whose shares rose 50 cents to close at $53.75 on the New York Stock Exchange. American Stores’ stock price fell 87.5 cents to $58.125.

American Stores is the third-largest U.S. operator of grocery stores and drugstores, with about 1,620 stores in 40 states.

Lucky, a Dublin, Calif.-based retailer, previously announced that other parties had expressed interest in acquiring it, causing a run-up in its share price from $45. But arbitragers said no names have emerged, a factor that has tempered speculation in the stock.

Lucky, which operates about 480 food stores in California, the Southwest and Florida, said the offer by American Stores was inadequate. American is anxious to acquire Lucky so it can expand in California, where Lucky is strong. American’s retail operation includes Acme Markets, Alpha Beta, Jewel Food Stores and Osco Drug.

Lucky said Thursday in documents filed with the Securities and Exchange Commission that other parties had expressed interest in buying it.

Lucky also said it adopted a warrant dividend plan under which each existing share would be entitled to an additional share in the event of a hostile takeover. Such a plan would make such takeovers too expensive to be consummated.