Lucky Says It Is Entertaining More Than 1 Suitor

Lucky Stores said Tuesday that it has received other takeover bids that compete with an unsolicited, $1.74-billion offer by American Stores. That hostile suitor, in turn, proposed that the matter be settled at an auction next Monday.

Although Lucky, based in Dublin, Calif., did not disclose the identities of the other bidders, Wall Street sources speculated that they include two Los Angeles-based firms specializing in buyouts: Riordan Freeman & Spogli and Gibbons Green van Amerongen.

Continuing to maintain a noncommittal stance, Lucky said in a statement Tuesday that it is “reviewing these proposals as well as other means of providing greater value to stockholders than the American Stores offer.”

Lucky said last week that it has considered a leveraged buyout to thwart the $45-a-share bid by American Stores, owner of the Alpha Beta chain. American Stores, which has headquarters in Salt Lake City, has said it would be willing to pay $50 a share if Lucky agreed to a friendly deal. (In a leveraged buyout, the acquired company’s assets are used as collateral to obtain financing for the purchase.)

In a letter to Lucky Chairman John M. Lillie dated Monday, American Stores Chairman L. S. Skaggs proposed that the matter be settled at an auction Monday. Under his plan, the winning bidder would be required to begin an offer for Lucky shares by May 6.

“We very much want to make the highest bid you will receive to acquire Lucky Stores,” Skaggs wrote.

To do that, he reiterated, American Stores needs access to non-public financial information about Lucky. “We have been advised that one or more other potential bidders have been given such access,” he added.

Lucky had earlier offered to provide American Stores such information but with stricter limitations than it has put on other interested bidders.

Skaggs added that, as part of the auction, the losing bidders could not attempt to interfere with the winner’s bid for 50 days after May 6. In addition, Lucky would be required to use its various anti-takeover measures to protect the winning bidder and fight off other suitors.

“American Stores obviously would like to make a fair, level playing field,” said Jonathan H. Ziegler, an analyst with the Sutro & Co. investment firm in San Francisco. “They need Lucky. They’d be willing to pay up.”

American Stores has offered to retain Lucky’s management and to change the name of its Alpha Beta stores to Lucky. Analysts say such a move would capitalize on Lucky’s well-established reputation as a low-price leader and help revive the lackluster Alpha Beta chain.

Lucky’s responses so far indicate that the management would like to stay independent or, perhaps, agree to a merger with a company that does not already have supermarket operations. In a similar situation, Campeau Corp., the Toronto developer buying Federated Department Stores, recently announced plans to leave in place the management of the company’s Ralphs Grocery division.

Ron Rotter, with Morgan, Olmstead, Kennedy & Gardner in Los Angeles, said that “an awful lot of other supermarket chains would like to acquire Lucky. . . . Obviously, in this day and age of the weak American dollar, foreign investors certainly are a strong possibility.”

Neither Gibbons Green nor Riordan Freeman would confirm having made a bid for Lucky. However, observers noted that Bradford M. Freeman, a principal of Riordan Freeman, and Lillie of Lucky were classmates at the Stanford business school and received their MBAs in 1964.

In composite New York Stock Exchange trading Tuesday, Lucky shares rose $1.375 each to $55.375.