Kroger to Sell Assets, Cut Staff to Foil Suitors : $4.6-Billion Revamping to Shrink Firm, Add Debt

Kroger Co. said Monday that it would sell stores and food-processing plants and reduce its work force as part of a $4.6-billion restructuring aimed at defeating two takeover bids.

Kroger officials contended that the restructuring would be more lucrative for shareholders than a $4.6-billion bid by Kohlberg Kravis Roberts & Co. or a competing $4.32-billion offer from Dart Group Corp.

Late Friday, when Kroger announced that its board had approved the restructuring, the company also said it had rejected both offers as inadequate.

Spokesmen for Dart and Kohlberg Kravis declined comment Monday.

The restructuring, which must be approved by shareholders, is worth $57 to $61 a share, or as much as $4.6 billion, officials said.

Antitrust Issues

The plan, first publicly proposed on Sept. 13, would pay shareholders $40 a share in cash, plus securities valued at $8 and publicly traded stock worth $5 to $10. Kroger has 78.6 million outstanding shares.

Dart, a retailing company that has made a number of unsuccessful takeover bids in recent years, offered last Monday to buy Kroger for $55 a share--$43 in cash and securities valued at $12--or about $4.32 billion.

Kohlberg Kravis, which has outbid Dart for three other corporations in recent years, entered the bidding last Tuesday by offering to buy Kroger for $58.50 a share--$50 in cash and $8.50 in securities, or a total of $4.6 billion.

Goldman, Sachs & Co., Kroger’s adviser, told company officials that the Kohlberg Kravis offer raised antitrust issues because the investment firm recently acquired two other grocery retailers, Safeway Stores Inc. and Stop & Shop Cos.

Kroger stock rose 62.5 cents to close at $56.375 a share in New York Stock Exchange trading Monday.

Company officials said at a news conference that they expected the asset sales to raise an estimated $333 million after taxes.

The restructuring would make the company smaller and increase its debt load, but leave it economically viable and competitive, Chairman Lyle Everingham and President Joseph Pichler said.

Asset Sales Detailed

Everingham declined to say how many employees would be laid off. The jobs would be eliminated at the grocery retailer’s Cincinnati headquarters, he said.